What good looks like
Cash flow forecasts: what good looks like
A cash flow forecast estimates the money coming into and going out of the business over the coming weeks or months, so you can see a shortfall before it happens.
The short answer
We have not found any legal requirement to have a cash flow forecast. The ICAEW says forecasts can highlight when a business might run low on cash. A useful one shows the cash you start with, the money you expect in and out each week or month, and the balance at the end of each period. It is worth updating when actual figures come in, monthly when things are steady and weekly when cash is tight. That timing is our judgement.
Why it matters
Profit and cash are different. A business can make a profit on paper and still run out of money if customers pay late, stock has to be bought up front, or a tax bill falls due. The ICAEW says "Cashflow forecasts can highlight when your business might run low on cash", and that up-to-date records of your trading "will enable you to produce regular cashflow forecasts".1
What a useful forecast contains
| Part | What goes in it |
|---|---|
| Opening cash | The bank balance at the start of each week or month |
| Money in | When customers are expected to pay, not when you invoice them. Also loans, grants or money put in by owners. |
| Money out | Wages, suppliers, rent, loan repayments, and tax bills such as VAT, PAYE and Corporation Tax, in the period they are paid |
| Closing cash | Opening cash plus money in, minus money out. This becomes the next period's opening cash. |
| Assumptions | A short note of what the forecast assumes, such as how quickly customers pay or when a big order lands |
| Actual against forecast | Once a period is over, what really happened next to what was forecast |
This list is our summary for our reviewer to check. It is not an official template.
How far ahead, and how often to update it
We have not found an official standard for how far ahead a forecast should look or how often it should be updated. Our working view:
- When things are steady: a month-by-month forecast for the months ahead, updated each month when the actual figures arrive.
- When cash is tight: a week-by-week forecast for the next few weeks, updated weekly.
- Before a big decision such as hiring, buying equipment or taking on a large order: run the forecast with and without it.
The ICAEW says businesses "need to plan ahead and compare forecast figures with actual results".1 Comparing the two each period shows where the forecast was wrong, so the next one is better.
Signs a forecast may not be doing its job
- It was made once, for a bank or a business plan, and never updated.
- It shows profit, not cash, so it misses when bills are actually paid.
- Tax bills are not in it.
- Nobody compares it with what actually happened.
Who can help
Some accountants build and update forecasts as part of their service. A bookkeeper can keep the actual figures up to date. For a business that is growing, borrowing or making large decisions, a part-time finance director may take this on. See Part-time finance director.
About this standard
This describes what a useful forecast can contain. It is drafted from published guidance and our own judgement, and is not a rule your accountant must follow. How our standards work.
Sources
- ICAEW, "Managing your business" (Find a Chartered Accountant, help with your business). icaew.com. Checked 12 October 2026.