If there’s one spreadsheet you have to set up, love, and cherish, it’s the cash flow forecast.  Visibility to your income and outgoings as far into the future as possible is like putting your headlamps on full beam down an unlit windy road. The further out you can see the better chance you have of not ending up in a ditch.  Of course you need to make sure you’re looking at the road to. The beam might be on but if you’re trying to record Spurs (boo!) v Arsenal (yeah!) on your iPhone Sky app, they might as well be off.  In other words, if you keep a cash flow …. look at it!

Your Head of Finance should set this up for you but as long as you know how to sum a column in Excel and link cells, it’s straightforward.  Here’s the practical guidance:

See out for 12 months minimum:

The main reason for keeping a cash flow is to know, well in advance, when you are likely to need a cash injection.  The sooner you get visibility to this, the better.  I always insist on a rolling 12 month cash flow for SME’s broken out by weeks.  Why 12 months?  It takes time to raise money – 3 months if you’re very lucky, typically 6 to 9, 12 or more is not uncommon.  If your cash flow is only rolling for 6 months, you’re not giving yourself enough time to fundraise.

Keep the set up simple:

Have your weeks running left to right at the top of the sheet;  on the left hand side, list your Clients and other sources of income; subtotal your income week by week; list your suppliers, payroll, VAT and other outgoings; sub-total your outgoings week by week; once you sub-total your income and outgoings, add a net cash flow line which deducts outgoings from income to show the weekly movement.  Finally add a carried forward line that keeps a running balance of the weekly movements – this is your bank balance.  As you grow it will become too cumbersome to list all your customers and suppliers so you can replace them with one line called Customer Payments and another for Supplier Payments with the detail held elsewhere.  We are happy to provide a template if you contact us at fdu@fdu-group.com.

Keep it confidential:

You should password protect the document as you do not want this getting into the wrong hands, especially employees who may get to see salary information and the state of the company’s finances.

Spot the trends and seasonality in your cash flow:

As you get into habit of regularly reviewing the cash flow you’ll quickly see patterns emerging – times in the month and in the year where cash is tight and an overdraft might be of benefit – e.g. VAT, payroll, and rent can land on the same day – and times when you have cash surpluses which may be better on deposit. 

Update it regularly:

Do not do this once then forget about it or update it once a year or when asked to by your Bank Manager.  Update it at least monthly and ensure the Board have visibility to it.  An up to date cash flow will ensure there are no surprises and funding can be addressed in good time.  Make sure the opening balance agrees to your bank account. This is often overlooked as the focus is on the future and not today.

Run scenarios on a separate tab:

Keep your master cash flow but then run “what-if” scenarios on a separate tab.  For example, you should see what happens to cash if sales come off 10% or margins deteriorate by 5%.


fdu group can help set this up for you.  Email fdu@fdu-group.com for more details.