Cash flow forecasting: prepare for the next decision

01 /

Start with a reliable opening position

Reconcile the starting cash balance and identify committed receipts and payments. Choose a forecasting interval that fits the decision and the business's cash cycle. Keep sales recognition separate from the date customers are expected to pay. Identify borrowing movements and owner transactions clearly rather than hiding them within operating activity.

02 /

Explain the assumptions

Build expected receipts from the work pipeline, billing arrangements and collection experience. Set out payroll, supplier commitments, investment and other expected payments, with tax timing checked by the appropriate adviser. Label assumptions that are uncertain. A forecast should make it possible to understand why a balance moves, not simply display the movement.

03 /

Review the decision and the variance

Compare actual cash with the forecast and explain material differences. Test delayed receipts, changed demand or additional costs when those could alter the decision. Identify the earliest point at which action would be needed. A model can inform a funding conversation, but it does not establish that a facility will be approved or available.

Use this in your business

A forecast review checklist

Opening cash reconciles with the available records.
Receipts use expected payment dates and realistic collection assumptions.
Committed and discretionary payments are visible separately.
Funding movements and repayment assumptions are explained.
A downside case and a review owner are identified.

Illustrative example

What this could look like

A new contract improves the sales forecast but requires staff and materials before the first payment arrives. Place those outflows and receipts in their expected periods. The commercial opportunity may be worthwhile while still requiring a separate plan for the cash gap.

Your next move

Bring the decision into focus.

Pivot Point's team describes cashflow, forecasting and finance work. Bring the decision, recent cash information and the assumptions you need to test.

Start a conversation Meet the advisory team

This guide is general preparation information. Advice on legal, tax and financial consequences needs to reflect your circumstances.