I am in no doubt that many businesses will face ongoing and significant cash shortages in the coming months, as the economic impact of the Covid-19 pandemic continues to play out. Monitoring and forecasting your business cash flow is one of the most important things you can do to maximise the chances of your company’s survival and avert a cash crisis.
Therefore, to support the UK’s Small and Medium-Sized Enterprises (SMEs), I have created a 16-week cash flow forecast template and instruction video below to help business owners and management teams forecast their businesses’ cash position. Click on the file link at the end of this page; all you need is Microsoft Excel and to invest a bit of your own time and effort to complete it.
The template should be used as a tool to help predict what the likely cash position of your business. If you are forecasting a “cash crunch”, then you can plan and devise steps early on, to ideally avert or at least delay the liquidity crisis that your business might face.
The forecast will help you be are aware of the forthcoming cash challenges, as opposed to being caught off guard. It aligned with my firm’s philosophy on how we help our clients: better management information leads to better business decisions.
Below are a few paragraphs to give more in-depth support after you’ve watched the video.
After you have entered the start date and your company name in the top left hand corner, start entering all the cash inflows. Please delete all the figures in the yellow cells of the template before you start, as these are just placeholder numbers to demonstrate how the template works.
As this is a cash flow, all figures include VAT, so they are entered Gross. I have created sample headings (e.g Customer 1, Customer 2), but these are just prompts. Amend the headings in each category as you see fit.
The key point when using a cash flow forecast is that you enter the amounts when you actually expect the cash to be received. It’s not a Profit and Loss Account, where you enter the number when the invoice is raised.
Again, please delete all the placeholder numbers in the yellow cells before you enter your own figures. Ensure you include VAT and that you enter the payments in the weeks when you will actually make the payments, not when you receive the purchase invoice or bill.
Only enter positive values for the cash outflows; do not enter negative values. For instance, do not enter figures with a minus (e.g. -2,000) in this section.
Replace the placeholder descriptions in column A with the most relevant descriptions. Remember to also add any debt and interest payments that the business is due to incur.
Closing Cash Balance
The forecast template is designed to work out the closing cash position for the next 16 weeks. The closing cash position is also shown in the graph, so you can quickly see the full picture.
It is important that you enter the correct opening cash balance into the template in week 1. Ensure you enter the opening cash balance on day 1 of the forecast. Use your online bank statement to obtain this figure.
Disclaimer: The template is a free tool and its use is entirely at your own risk. Specialist Accounting Solutions Ltd will not be liable for any errors therein.