Cash flow forecast template

If you want to get a better understanding of the money flowing in and out of your business, a cash flow forecast could help you do so. We’ve put together a guide including everything you need to know on the topic, including a free downloadable cash flow forecast template.

You can either download the template to use on excel or make a copy of it on Google sheets. Download it today and read on to get a better understanding of managing your business’ money.

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What is a cash flow forecast template?

In simple terms, a cash flow forecast is a document where you can record your business’ outgoings (costs) and balance them with the money you have coming in (income).

In the template, you’ll need to detail all outgoings such as staff salaries, rent payments and the cost of materials, as well as incoming payments such as sales revenues, cash grants or small business loans.

Why is a cash flow forecast template important?

Using a template like this helps keep your finances transparent so that you don’t spend money you don’t have. It can also highlight times where cash flow might be tight and help you know when you might need to manage your money more carefully or look for additional funding.

You can’t predict every cost your business will incur each month, as unexpected outgoings do crop up – the office boiler packing up, or your company car failing its MOT. While a cash flow forecast can’t show you the future, if you keep it up to date and accurate then it will make each month’s cash flow easier to manage.

As lockdown slowly comes to an end and business gradually returns to 'normal', keeping close tabs on what you’re spending and earning could play a key role in your recovery.

How do I complete my cash flow forecast template?

Your cash flow forecast template is made up of three key parts – a tab where you can input your income and costs, a cash flow summary and a cash position graph.

Follow these steps to get the most out of the template:

Go to the ‘Input income / costs’ tab This is where you can add your income and costs. To do so, select a category from the drop down menu and then add the appropriate month, amount and any notes.

You'll find there are already a few example inputs – just delete them and add your own.  

Click on the ‘Cash flow forecast summary’ tab Once you’ve added your income and costs they’ll automatically be added to the ‘Cash flow forecast summary’ tab. You’ll be able to view each category on a month-by-month basis and view your total income, total costs and net income (income - costs).

Use the ‘Net income graph’ for a visual view of your cash flow Finally, if you’d like to view your cash flow on a graph you can do so using the third tab – ‘Net income graph’. This graph will automatically update, along with the summary page, as you input more income and costs.

What does each section mean?

If you’re unclear on what to include in each section here are some details on what they mean.

Income Your business’ income refers to any money coming in – including revenue generated from sales, as well as what you receive from grants, loans or capital investments. Don’t worry if you don’t have a figure for every income category on the template – just leave them blank if they don’t apply.

Costs These are anything that costs your business money, and can range from buying new stock, to insurance fees and rent payments. The easiest costs to calculate are recurring ones, but keep in mind any irregular payments such as your V.A.T bill too.

We’ve included a long list of costs in our template to try and make it relevant to as many different businesses as possible. If one of the costs doesn’t apply to your business, just leave it blank.

Summary The ‘summary’ section of the sheet shows you your total income and costs, as well as your net income. Once you’ve completed more than one month in the sheet, you’ll also be able to see your month-on-month income increase or decrease.

Our template will automatically subtract your costs from your income, but the formula to work this out yourself is:

Total income – total costs = net income

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Recommendations on creating a cash flow forecast

Be realistic Whilst it’s natural to want to paint your business in the best light, making unfounded assumptions without good reason can undermine your forecast and reduce its accuracy. Why not consider giving yourself an additional cost buffer of around 10-20% to protect yourself from unexpected costs?

Include what you know If you have committed expenses or income such as a subscription revenue, then you should include it in your cash flow forecast to make it as accurate as possible. If there are gaps but you know that you have an upcoming cost then why not include a placeholder which you can update until you get more clarity on the actual figure.

Try to include the following in each respective categories:

Cash out

• Rent
• Salaries
• Raw materials
• Buying assets
• Bank loans, fees and charges
• Marketing and advertising spend
• Tax bills

Cash in

• Sales
• Tax refunds
• Grants
• Investment from shareholders or owners
• Royalties or licence fees
• Finance (loans)

Accurately record variable costs Some expenses, for example utility bills, can vary across the year and distort your estimates if you assume flat rates. Try to record these figures as accurately as possible and leave room for variation.

For example, your heating bill is likely to be far lower in summer than winter so assuming a flat rate for all months will be inaccurate.

Consider the impact of payment terms Just because you’ve invoiced a customer this month doesn’t mean you’ll get paid this month. If your business uses long payment terms, then make sure to account for these in your cash flow forecast.

For example, if you use 60 day invoice terms, be aware that your payment could be delayed by up to two months. Learn how you can gain control of your payment terms with iwocaPay.

Plan for multiple scenarios Planning for as many variations of the future as possible could place you a few steps ahead, and keep you from falling victim to unexpected costs.

For example, you could plan for if lockdown ends earlier than expected, and for if it continues for longer. What if demand for your main product surges, and what if it falls?

Review your forecast over time Compare your forecast against how your business is performing in reality, and update it based on any new information you have available. Recalibrating your estimates as you go will mean you’ll be able to gage how accurate you are and adapt for the future.