Cash Flow Forecast: What Goes In, How to Build It, and a 13-Week Example
A cash flow forecast is a table of the cash you expect to receive and pay, period by period, with a closing balance for each period. Start from today's bank balance. Add each receipt when it will reach your account, subtract each payment when it will leave, and carry each closing balance forward. Our default is 13 weekly periods, checked against the bank every week.
- Date every line by the week the money moves through your bank account.
- Find the lowest closing week and compare it with your floor.
- Each week, swap the closed week for its actuals and add a new one at the end.
Three rules run through the method below:
What a cash flow forecast is, and what it is not
A cash flow forecast looks forward and counts only cash: money entering and leaving your bank account, in the week it moves. Profit figures follow different rules. Under the cash method, income counts in the year you receive it and expenses in the year you pay them; under an accrual method, income counts when it is earned1. A job invoiced in March and paid in May is March revenue on an accrual profit and loss, and May cash in your forecast.
| document | looks | basis |
|---|---|---|
| Cash flow forecast | Forward | Cash |
| Cash flow statement | Back | Cash |
| Budget | Forward | Accrual or cash |
| Profit and loss | Back | Accrual or cash |
The cash flow statement is the backward-looking report in a set of financial statements. Under US GAAP its operating section may use the direct method, which shows receipts minus payments, or the indirect method, which reconciles net income to cash. Both give the same operating cash flow2. A forecast you run the business with uses the direct layout, because each row is a payment you will receive or a bill you will pay.
The forecast sits next to a business plan and answers a narrower question: will the account stay above your minimum, and which week gets tight. It does not show whether each sale makes money. For that, work out your margin per sale.
The decisions a forecast changes
A forecast is useful when it changes a decision before the money runs short. In the example below (every figure is our assumption), the account bottoms out in week 8, $600 under the floor. These are the decisions that week drives:
- Hire. A new hire on a biweekly payroll adds a payment every two weeks from the first pay date. The forecast shows whether the account covers those weeks before the work pays.
- Buy equipment. Move the purchase to the week after a large receipt. In our example (assumptions), moving a $4,000 purchase from week 1 to week 9 lifts week 8 from $4,400 to $8,400.
- Accept net-30 terms. The forecast counts the weeks you fund the work before the first invoice is paid.
- Borrow before the dip. Ask for a line of credit while the gap is still weeks away.
- Chase an invoice. When one client runs two weeks late, the forecast shows which week falls below the floor.
Lenders read forecasts too. The SBA’s business plan guidance asks for forecasted cash flow statements when you seek funding3. When a business is short of cash, lenders and restructuring advisors ask for a 13-week forecast that is checked against actuals every week4.
What goes into a forecast: the rows
Rows run from opening cash to closing cash. The third column is the rule that makes the forecast match your bank: each row is dated by the day cash moves.
| row | what goes in | dated by |
|---|---|---|
| Opening cash | Bank balance, less uncleared checks | Start of the week |
| Customer receipts | Cash sales, card settlements, paid invoices | Day the money lands |
| Other receipts | Loans drawn, owner money in, tax refunds, asset sales | Day the money lands |
| Payroll | Net pay | Pay date |
| Payroll taxes | Withheld and employer taxes | IRS deposit date |
| Suppliers and rent | Bills | Due or debit date |
| Taxes | Estimated tax, sales tax collected | Due or filing date |
| Loan payments | Principal and interest | Debit date |
| Owner’s draws | Money you take out | Transfer date |
| Equipment | Purchases | Payment date |
| Net cash flow | Total receipts minus total payments | The week |
| Closing cash | Opening plus net cash flow | End of week |
Four of these rows run on calendars set by someone else:
- Payroll taxes. The IRS uses either a monthly or a semiweekly deposit schedule, and before each calendar year you determine which one applies to you5.
- Estimated tax. For 2026 the four due dates fall on April 15, June 15 and September 15, 2026, plus January 15, 20276.
- Sales tax. You remit what you collected on the state’s schedule. In Colorado, a business collecting $50 or less a month may file annually, under $1,100 a month quarterly, and $1,100 or more a month must file monthly7.
- Owner’s draws. A draw from a sole proprietorship is not a deductible business expense; it is a distribution of the owner’s equity8. It never shows on the profit and loss, and it still leaves the account.
How to build a cash flow forecast in 6 steps
Pick the horizon and the period
| horizon | period | use it for |
|---|---|---|
| 13 weeks | Weekly | Payroll, bills, taxes, the low week |
| 12 months | Monthly | Plans, lenders, hiring |
| Rolling | Either | Adding a period as each one ends |
Thirteen weeks is one quarter4. Our recommendation is a rolling forecast: a fixed quarter shrinks to one week by its last Monday, while a rolling one always shows 13. The monthly version belongs in the financial section of a business plan.
In the example, week 1 is the week the new contract starts.
Set the opening cash
Take today’s bank balance and subtract checks you have written that have not cleared. Use the bank figure: a balance in your accounting file can include invoices nobody has paid. If you have not launched, opening cash is what remains after you pay what it costs to start.
In our example, we assume opening cash of $18,000.
Forecast receipts by when they land
Receipt week = invoice date + payment terms + the client’s usual lateness. “Net 30” gives the customer 30 calendar days from the invoice date9. Measure lateness from your last invoices to each client; with no history, write the lateness down as an assumption. If you sell to a market you have not tested, size the market before you forecast sales.
Pessimistic timing rule: when you are unsure, put a receipt in the later week and a payment in the earlier one.
In our example, we assume $12,000 is invoiced at the end of week 4 on net 30, so it is due around week 8; we place it in week 9, one week late.
Forecast payments by when they leave
Payroll goes in on its pay dates. A biweekly payroll has 26 pay dates in most years, so two months each year carry three paychecks10. A monthly forecast that assumes two paydays a month misses a full payroll twice a year. Annual bills such as insurance and licenses go in their real week.
In the example, payments fall in these weeks (all figures are assumptions). Rent and the loan are paid monthly, not every four weeks. A month is a little longer than four weeks, so each is paid three times in the quarter. The fourth rent payment falls in week 14, outside this forecast, so week 13 carries only supplies.
| payment | amount | weeks |
|---|---|---|
| Payroll (biweekly) | $10,000 | 2, 4, 6, 8, 10, 12 |
| Rent (monthly) | $2,500 | 1, 5, 9 |
| Supplies | $1,200 | Every week |
| Loan payment (monthly) | $1,500 | 4, 8, 12 |
| Estimated tax | $3,000 | 11 |
| Equipment | $4,000 | 1 |
Add the totals, set a floor, find the low point
Our method, with every rule the template’s formulas apply:
| term | rule |
|---|---|
| Net cash flow | Receipts minus payments, for the week |
| Closing cash | Opening plus net cash flow; next week opens with it |
| Low point | The lowest closing cash in the 13 weeks |
| Floor | The minimum balance you choose |
| Shortfall | Floor minus low point, when above zero |
| Variance | Actual minus forecast, per line, per week |
| Re-forecast trigger | A line off by more than 10% two weeks running |
| Roll | Drop the finished week, add week 14 |
The floor is your choice. No standard sets it; many owners pick a sum that covers one payroll or a few weeks of fixed bills. The shortfall is the cash to find before the low week arrives. The 10% trigger is our assumption, not a standard; tighten it if your receipts are steady.
In our example, the low point is $4,400 in week 8 against an assumed $5,000 floor, a $600 shortfall.
Compare with actuals and roll forward
Pick one weekday and keep it. Replace the finished week’s forecast with the bank’s actual figures, record the variance per line, then drop that week and add week 14. Re-forecast a line only when it misses past the trigger two weeks running; one late payment is noise.
Example: 13 weeks for a cleaning company with a new contract
This is an example by our method, and every figure in it is an assumption. A small commercial cleaning company starts a new office contract in week 1. It bills $12,000 every four weeks (end of weeks 4, 8, 12) on net-30 terms. It also hires two cleaners, who add $3,000 to each biweekly payroll, and buys $4,000 of equipment. In our example, existing clients pay $6,000 a week (assumption). In our example, the floor is $5,000 (assumption).
Closing cash by week, in dollars (all figures are assumptions):
| week | opening | receipts | payments | closing |
|---|---|---|---|---|
| 1 | 18,000 | 6,000 | 7,700 | 16,300 |
| 2 | 16,300 | 6,000 | 11,200 | 11,100 |
| 3 | 11,100 | 6,000 | 1,200 | 15,900 |
| 4 | 15,900 | 6,000 | 12,700 | 9,200 |
| 5 | 9,200 | 6,000 | 3,700 | 11,500 |
| 6 | 11,500 | 6,000 | 11,200 | 6,300 |
| 7 | 6,300 | 6,000 | 1,200 | 11,100 |
| 8 | 11,100 | 6,000 | 12,700 | 4,400 (low point) |
| 9 | 4,400 | 18,000 | 3,700 | 18,700 |
| 10 | 18,700 | 6,000 | 11,200 | 13,500 |
| 11 | 13,500 | 6,000 | 4,200 | 15,300 |
| 12 | 15,300 | 6,000 | 12,700 | 8,600 |
| 13 | 8,600 | 18,000 | 1,200 | 25,400 |
In our example, quarterly receipts total $102,000 and payments $94,600, so $18,000 + $102,000 − $94,600 = $25,400 (assumptions).
The contract is profitable on paper and still causes the dip. In our example, it bills $36,000 in the quarter, but only $24,000 arrives within it. In our example, it adds 6 × $3,000 = $18,000 of payroll against that, plus the $4,000 of equipment (assumptions). Week 8 carries a payroll and a loan payment, and the first contract payment lands a week later.
The fix: buy the equipment in week 9, after the first contract payment. In our example, week 8 then closes at $8,400, and week 9 still closes at $18,700. A second option is to ask the client for a deposit or shorter terms before you sign.
Reading the forecast with variance and what-ifs
After four weeks, compare each line with the bank. Actuals here are assumptions:
| weeks 1–4 | forecast | actual | variance |
|---|---|---|---|
| Receipts | $24,000 | $22,500 | −$1,500 |
| Payments | $32,800 | $33,400 | +$600 |
| Closing cash, week 4 | $9,200 | $7,100 | −$2,100 |
Explain the gap by the lines that moved; in our example, existing clients paid $1,500 less and supplies ran $600 over. In our example, rolling this forward with nothing else changed drops week 8 from $4,400 to $2,300. Under our assumed 10% rule, re-forecast existing receipts only if the miss repeats next week. Act on the $2,700 shortfall in our example now, since the floor rule does not wait.
Then test the timing you are least sure of:
- The first contract payment lands two weeks late, in week 11. In our example, week 9 closes at $6,700, week 10 at $1,500 (the new low point), and week 11 at $15,300.
- Existing receipts fall 5% to $5,700 a week. In our example, the gap reaches 8 × $300 = $2,400 by week 8, so week 8 closes at $2,000.
Pick the fix that matches the cause. If one purchase is behind the gap, move that purchase. If a client’s payment timing causes it, ask that client for a deposit or shorter terms. If neither closes the gap, arrange credit before the low week.
Why forecasts miss, and the fix for each
| mistake | fix |
|---|---|
| Receipts dated by invoice date | Invoice date + terms + usual lateness |
| Two paydays every month on a biweekly payroll | Real pay dates; two months have three10 |
| Tax deposits left out | Rows for payroll tax, estimated tax, sales tax |
| Draws and loan principal left out | Add them; both leave the account |
| Annual bills spread evenly | Each bill in its real week |
| Rows named revenue and expenses | Receipts and payments, by cash date |
| Optimistic timing | Receipts late, payments early |
| No comparison with the bank | Weekly variance, re-forecast repeat misses |
Most misses are timing errors: the amount is right and the week is wrong. A weekly comparison with the bank finds them within a week or two.
Spreadsheet or software
A spreadsheet covers one bank account and a few dozen rows. It needs two formulas: closing cash = opening + receipts − payments, and low point = MIN of the closing row. Our 13-week template has the cleaning example as preset rows with live formulas; overwrite them with your own figures. For the plan around it, use the business plan template.
Software pulls actuals from bank feeds and saves the weekly typing. In PwC’s 2025 Global Treasury Survey, companies using manual methods averaged 2.9 out of 5, against 3.3 for system-based users11. Choose a spreadsheet if you run one account and fewer than 50 rows (assumption); choose software if you reconcile several accounts every week. Either way, weekly forecasts use the direct method. The indirect method starts from net income and tends to fit monthly or annual views.
FAQ
How is a cash flow forecast different from a cash flow statement?
The forecast looks ahead and lists expected receipts and payments by week. The statement reports past cash flows and may present operating cash by the direct or the indirect method2.
How far ahead should a cash flow forecast go?
Thirteen weeks, weekly, for running the business. For plans and funding, use monthly or longer periods: the SBA’s guidance asks for a five-year financial outlook3.
How often should you update it?
Weekly, on the same weekday. Once a week closes, record its actuals and roll the window forward to a new week 13.
Can a profitable business run out of cash?
Yes. In our example (assumptions), a contract that bills $36,000 in a quarter brings in only $24,000 within it and pushes week 8 below the floor.
Why are cash flow forecasts often wrong?
They date cash by invoice or expense date, assume two paydays a month on a biweekly payroll, and skip tax deposits and draws. The table in the section above pairs each mistake with its fix.
If you have not launched yet and your first receipts and costs are still guesses, test the idea before you forecast it: Check your idea for free.
Sources
- irs.gov, 10/22/2026
- viewpoint.pwc.com, 10/22/2026
- sba.gov, 10/22/2026
- afasterexit.com, 10/22/2026
- irs.gov, 10/22/2026
- tavellagroup.com, 10/22/2026
- tax.colorado.gov, 10/22/2026
- fylehq.com, 10/22/2026
- invoicesimple.com, 10/22/2026
- indeed.com, 10/22/2026
- pwc.com, 10/22/2026
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