Simple Cash Flow Forecast Template for Beginners

If you’ve never made a cash flow forecast, the word “forecast” can sound technical. It isn’t. A cash flow forecast is simply a list of the money you expect to come in and go out, month by month, so you can see how much you’ll have in the bank. This guide is for complete beginners. No jargon, no accounting, and a useful forecast in about 30 minutes.

The five lines that matter

Every forecast, however large, comes down to five lines for each month:

1. Money at the start of the month (what’s in the bank).
2. Money coming in during the month.
3. Money going out during the month.
4. The difference (in minus out).
5. Money at the end of the month, which becomes next month’s starting figure.

That’s it. Everything else is just splitting “money in” and “money out” into a few categories so you can see where it comes from and goes to.

Your first forecast in 30 minutes

1. Get last month’s bank statement (5 minutes)

It’s the best guide to what really happens. Highlight the main payments in and out.

2. Write down your money in (5 minutes)

List where your money comes from, using no more than three or four lines, for example:

• Customer payments
• Other income

For each of the next few months, write how much you expect to arrive in that month. If customers pay a month after you bill them, put the money in the following month.

3. Write down your money out (10 minutes)

List your regular payments in a few lines, for example:

• Wages (including your own pay)
• Rent and bills
• Stock or materials
• Everything else

Then add any big, occasional payments in the month they’re due: a tax bill, an insurance renewal, a piece of equipment. These are the ones that catch people out.

4. Do the sums (5 minutes)

For each month: start + in − out = end. The end figure is next month’s start. A template does this automatically.

5. Look at the lowest month (5 minutes)

Find the month with the smallest end figure. That’s the month to plan for.

A beginner’s example

A dog-grooming business has $6,000 in the bank.

February is the tight month, because of the yearly van insurance. Knowing that in December, the owner could save a little each month, ask to pay the insurance monthly, or book extra appointments in January.

Three first forecasts

A freelance writer earns from four regular clients who pay at different times. Her first forecast has two money-in lines (regular clients, one-off work) and four money-out lines (her own pay, tax savings, software, everything else). The lowest month turns out to be April, when a tax payment is due and one client pays late. She starts moving 25 percent of every payment into a tax pot.

A market-stall food business takes cash and card at weekend markets. Money in is simply takings per market times markets per month; money out is ingredients, pitch fees, fuel and the owner’s pay. The forecast shows that winter, with fewer markets, needs cash saved from the summer.

A new online shop sells through its own website and a marketplace. The forecast shows that stock for the holiday season must be paid for in September, long before the December sales arrive. The owner orders in two batches instead of one.

Each of these forecasts has fewer than ten lines, and each found something the owner didn’t know.

Plain-English jargon buster

More definitions are in the glossary.

Beginner mistakes to avoid

• Counting money before it arrives. If a customer usually pays late, forecast it late.
• Forgetting yourself. Include the money you take out to live on.
• Forgetting yearly bills. Insurance, subscriptions, tax and licences.
• Being too optimistic. Round money in down and money out up.
• Doing it once. Spend ten minutes at the end of each month replacing guesses with what really happened.

Keeping it going

The first forecast is the hardest. After that, a ten-minute monthly habit keeps it useful:

1. Open your bank statement for the month that just finished.
2. Type what actually came in and went out over your guesses for that month.
3. Notice anything that was very different, and ask why. Did a customer pay late? Was a bill bigger than expected?
4. Adjust the coming months if the same thing is likely to happen again.
5. Add one more month at the end, so you always see a year ahead.

After three or four months, your guesses will be much closer to reality, and you’ll start to see problems months before they arrive.

When to add more detail

Once you’re comfortable, you can:

• Split “money in” by customer or product, to see where income really comes from.
• Look week by week when money is tight, using a weekly forecast.
• Set a buffer and let the template highlight months below it in red.
• Compare what happened with what you forecast, to get better each month.

The step-by-step version for when you’re ready is how to make a cash flow forecast. If you want a quick check without downloading anything, try the cash flow calculator.

Get the simple template

The free template below is built for beginners. The yellow cells are where you type, everything else works itself out, and a Start Here tab explains each step in plain English.

When your business grows, an industry template adds the lines and calculations your type of business needs.