What is a cash flow forecast?

A month-by-month estimate of the money that will reach and leave your bank account. It starts from today's balance, adds the cash you expect to receive, takes off the cash you expect to pay, and carries each month's closing balance into the next. Its job is to show the month the balance gets lowest, early enough to do something about it.

How do I make a simple cash flow forecast?

Start with the money in the bank today. For each of the next 12 months, write down when customers will actually pay (not when you invoice), then every payment going out: suppliers, wages, rent, loan repayments, drawings, and one-off bills such as tax, GST or VAT and annual insurance. Cash in minus cash out is the month's net cash flow; add it to the opening balance to get the closing balance, which becomes next month's opening balance.

Can I download this cash flow forecast template for Excel or Google Sheets?

Yes. "Download spreadsheet" saves a CSV with one column per month that opens in Excel, Google Sheets or Numbers. Totals, net cash flow and balances are formulas, and each month opens with the previous month's closing balance, so you can change any figure and the rest follows. "Blank template" gives the same layout with zeros.

Should a cash flow forecast include GST or VAT?

Yes. Customers pay you the GST or VAT on top of the price, and you pay it to the tax office later, usually quarterly. Enter sales and supplier costs including it, and put each GST or VAT payment in as a one-off in the month it is due, or the forecast will look better than the bank will.

What is the difference between a cash flow forecast and a profit forecast?

A profit forecast counts sales when invoiced and costs when incurred, without GST or VAT. A cash flow forecast counts money when it moves, so it includes customer payment delays, tax payments, loan repayments and drawings, none of which change profit. A business can forecast a profit and still run out of cash.

How far ahead should a cash flow forecast go?

Twelve months by month shows the seasons and the big annual bills. When the balance is tight, add a weekly forecast for the next 13 weeks, because a month that ends in credit can still dip below zero in the middle when wages go out before customers pay.

Can Xero do a cash flow forecast?

Xero's short-term cash flow shows the projected balance for the next 7 or 30 days from the invoices and bills already in Xero. It does not forecast 12 months, and it misses wages, tax and spending not entered as bills. For a longer view you build a forecast like this one, using Xero's reports for the starting figures.

Are my figures stored or sent anywhere?

No. The forecast and the download are built in your browser. Nothing you type is saved or sent to our server or anyone else. The only exception is if you ask us to email you the result: then your email address and a short summary of the result are stored, and nothing is sent until you confirm.

Cash flow forecast: free 12-month template and calculator

How to fill in the forecast

Cash in the bank today, from your bank or Xero's bank accounts on the dashboard.
Sales you expect to invoice each month, including GST or VAT. Use last year's same months as the starting point if your trade is seasonal.
When customers pay. If most pay 30 days after the invoice, choose "the month after". Put in what customers owe you today; that is the Aged Receivables total in Xero.
Direct costs as a share of sales, when you pay suppliers, and what you owe them today (Aged Payables).
Regular monthly payments: wages including tax and super or pension, overheads, loan repayments and what you take out yourself.
One-off payments in the month they leave the bank: each GST or VAT return, income or corporation tax, annual insurance, a vehicle deposit.

The forecast then shows each month's closing balance. The figure to look at is the lowest one, not the last one.

Worked example: an air-conditioning installer's year

A Perth air-conditioning installer, forecasting from July, figures including GST. Made-up figures to show the arithmetic. Cash in the bank on 1 July: $45,000. Sales run from $38,000 a month in winter to $100,000 in January; customers pay the month after, and suppliers are paid the month after at 40% of sales. Each month: wages $22,000, overheads $6,000, the ute loan $1,500 and drawings $4,000. One-offs: quarterly BAS payments of $7,000 (July), $6,000 (October), $9,500 (February) and $8,000 (April), and $5,200 of annual insurance in August.

Month	Cash in	Cash out	Closing
Jul	38,000	55,700	27,300
Aug	40,000	54,700	12,600
Sep	38,000	48,700	1,900
Oct	48,000	58,700	−8,800
Nov	62,000	58,300	−5,100
Dec	80,000	65,500	9,400
Jan	95,000	71,500	32,900
Feb	100,000	83,000	49,900
Mar	90,000	69,500	70,400
Apr	70,000	69,500	70,900
May	52,000	54,300	68,600
Jun	42,000	50,300	60,300

What it says to the owner:

The year is fine; October is not. Cash ends the year up $15,300, but the account is $8,800 overdrawn at the end of October and still $5,100 under at the end of November. The busy season's invoices are paid a month late, while the October BAS and suppliers for the first summer jobs go out on time.
The fix has to start in August. Pausing drawings for August, September and October keeps $12,000 in the account and lifts the October low to $3,200. That is above zero, but less than one month's fixed costs, so it is still tight. An overdraft of $10,000 to $15,000 agreed in winter, or a deposit on each installation, closes the rest. A limit is easier to arrange in July, with a forecast in hand, than in late October with the account already overdrawn.
Watch the receipts line. If customers paid two months after instead of one, the low would be much deeper. Set "Customers pay" to two months to see it.

Press "Load the worked example" above to see it in the forecast. For a full 12-month forecast with every line broken out, a what-if for a new hire and where each figure comes from in Xero, see the cash flow forecast example guide. To build your own in Excel or Google Sheets instead, the cash flow spreadsheet guide gives the row layout, the formulas and two check cells that catch a broken total.

Mistakes that make a forecast look better than the bank

Forecasting sales instead of receipts. Money arrives when customers pay, not when you invoice. A 30-day delay moves every busy month's cash a month later.
Leaving out GST or VAT. It comes in with every sale and goes out in a lump each quarter. The cash inflow and outflow examples list what counts on each side.
Forgetting the annual bills. Income or corporation tax, insurance, registrations and the accountant's fee are easy to miss because they do not happen every month.
Using profit instead of cash. Depreciation is not a payment, while loan repayments and drawings are. See profit but no cash for why the two differ.
Never updating it. Each month, replace the forecast month that just ended with what really happened, and add a new month at the end.

Monthly, weekly and Xero's own view

A monthly forecast shows the seasons and the big bills. When the low point is close to zero, a month that ends in credit can still dip below it mid-month, so add a 13-week cash flow forecast for the weeks ahead. Xero's short-term cash flow projects the next 7 or 30 days from invoices and bills already in Xero. To plan the year's big payments month by month before you forecast, see the cash flow budget guide. To test what-ifs such as slower payers or a lower margin without retyping every month, a cash flow model works each month out from a few drivers: in its worked example, customers taking 60 days and a margin 3 points lower together take a coffee roaster from a £37,800 low point to £2,760 overdrawn in May. If a bank or investor wants the cash forecast tied to a forecast Profit and Loss and Balance Sheet, the 3-way cash flow forecast guide works one through. And for a single "how long will the cash last" figure, the cash runway calculator is quicker.

Questions

What is a cash flow forecast?: A month-by-month estimate of the money that will reach and leave your bank account. It starts from today's balance, adds the cash you expect to receive, takes off the cash you expect to pay, and carries each month's closing balance into the next. Its job is to show the month the balance gets lowest, early enough to do something about it.
How do I make a simple cash flow forecast?: Start with the money in the bank today. For each of the next 12 months, write down when customers will actually pay (not when you invoice), then every payment going out: suppliers, wages, rent, loan repayments, drawings, and one-off bills such as tax, GST or VAT and annual insurance. Cash in minus cash out is the month's net cash flow; add it to the opening balance to get the closing balance, which becomes next month's opening balance.
Can I download this cash flow forecast template for Excel or Google Sheets?: Yes. "Download spreadsheet" saves a CSV with one column per month that opens in Excel, Google Sheets or Numbers. Totals, net cash flow and balances are formulas, and each month opens with the previous month's closing balance, so you can change any figure and the rest follows. "Blank template" gives the same layout with zeros.
Should a cash flow forecast include GST or VAT?: Yes. Customers pay you the GST or VAT on top of the price, and you pay it to the tax office later, usually quarterly. Enter sales and supplier costs including it, and put each GST or VAT payment in as a one-off in the month it is due, or the forecast will look better than the bank will.
What is the difference between a cash flow forecast and a profit forecast?: A profit forecast counts sales when invoiced and costs when incurred, without GST or VAT. A cash flow forecast counts money when it moves, so it includes customer payment delays, tax payments, loan repayments and drawings, none of which change profit. A business can forecast a profit and still run out of cash.
How far ahead should a cash flow forecast go?: Twelve months by month shows the seasons and the big annual bills. When the balance is tight, add a weekly forecast for the next 13 weeks, because a month that ends in credit can still dip below zero in the middle when wages go out before customers pay.
Can Xero do a cash flow forecast?: Xero's short-term cash flow shows the projected balance for the next 7 or 30 days from the invoices and bills already in Xero. It does not forecast 12 months, and it misses wages, tax and spending not entered as bills. For a longer view you build a forecast like this one, using Xero's reports for the starting figures.
Are my figures stored or sent anywhere?: No. The forecast and the download are built in your browser. Nothing you type is saved or sent to our server or anyone else. The only exception is if you ask us to email you the result: then your email address and a short summary of the result are stored, and nothing is sent until you confirm.

This forecast gives an estimate from the figures you enter. It is not financial or tax advice. Xero is a trademark of Xero Limited. This tool and ReportPilot are independent and are not made or endorsed by Xero.

Cash flow forecast: see your bank balance for the next 12 months

Your cash flow forecast