Cash Flow Forecast Template
Plan your cash flow for the next 12 months with this handy cash flow forecast template for Excel.
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Use Bench Accounting’s cash flow forecasting template for better monthly financial planning
Running a small business means navigating the unique and complex financial needs of the business. Understanding your cash flow projections can serve as the compass that guides you in the right direction so you're able to meet your business’s needs and plan adequately for future growth.
Here at Bench Accounting, we recognize that DIY financial planning isn't easy, which is why we've created this free and easy-to-use cash flow forecast template for small business owners. This powerful tool can help you see exactly where your cash is coming from and how it’s being spent. It will allow you to predict, plan, and protect your business's financial health by providing you with the insights you need to make confident cash-related decisions moving forward.
What is cash flow forecasting?
Cash flow forecasting is a critical financial planning process that allows businesses like yours to predict cash flow—the amount of cash that moves in and out of the business over a specific period. Your cash flow projections are arguably the best way to anticipate future cash inflows and outflows, ensuring you have enough liquidity to meet your business's operational and ongoing needs.
The key components of a cash flow forecast typically include:
- Opening cash balance: The amount of cash you start with at the beginning of the period (usually each month)
- Cash inflows: Money coming into your business from various sources (sales, receivables, loans)
- Cash outflows: Money leaving your business (expenses, payroll, loan payments)
- Closing cash balance: The remaining cash at the end of the forecasting period after expenses are taken care of
How is a cash flow forecast different from a cash flow statement?
While a cash flow statement records the actual cash movements that have already occurred, a cash flow forecast is a forward-looking tool that predicts future cash flows.
You need the information from your cash flow statement to help predict upcoming cash flow scenarios. This is because your cash flow statement lays out critical historical data regarding how seasonality, certain expenses, and other business situations have impacted your overall cash flow throughout time.
Think of your cash flow statement as a financial rearview mirror, while a cash flow forecast is your GPS— helping you navigate potential financial challenges and opportunities ahead.
Why you should use a cash flow forecasting template
A cash flow forecasting template is not just a nice-to-have—it's a must-have for small business owners seeking financial stability and growth. By providing a structured approach to financial planning, these templates offer invaluable insights into your business's financial health.
Here are a few examples of how using a cash flow forecasting template can help:
1. Secure funding
Investors and lenders want to see that you understand your business's financial trajectory. A well-prepared cash flow forecast (which comes from using our free template) demonstrates financial acumen. This can significantly improve your chances of securing loans or attracting investors by showing you have a clear understanding of your business's financial potential.
2. Make better financial decisions
Imagine knowing exactly how much cash you'll have available before making a major equipment purchase or hiring a new employee. A cash flow forecast allows you to make these strategic purchase decisions with confidence. For instance, you might discover you have surplus cash to invest in marketing or realize you need to delay a major expense until next month.
3. Identify potential cash flow gaps
By projecting your future cash flows based on ongoing cash sources, expenses, and historical financial data, you can spot potential shortfalls before they become critical problems. This proactive approach allows you to develop strategies to bridge these gaps, such as securing a line of credit or adjusting your spending to manage the times when you’re spread thin.
4. Track and manage your spending
A cash flow forecast template also helps you keep track of your spending efficiency, manage surplus cash, and stay on top of outstanding payments. It provides a clear picture of where your money is coming from and where it's going. With improved strategic financial management, you're able to see whether your spending is justified or if you need to budget better.
How to forecast cash flow with Bench Accounting's free template
Bench's cash flow forecast template provides a comprehensive 12-month view of your projected cash flows, allowing you to visualize and review an entire year's financial landscape at a glance.
Here’s how to use it to your advantage:
Step 1: Download and open the template
Simply enter your information above to access the downloadable file. We'll also send the template to your email for future referencing. Open it up, take a look to familiarize yourself with it, and you're ready to start forecasting.
Important note: cells with blue dollar figures are automated and should not be adjusted.
Step 2: Input your operating cash and sources of cash
Begin by entering your Operating Cash in line A. This information can be found on your balance sheet and is the cash you expect to start the month with. It should include bank accounts, PayPal, Venmo, anything you use that's currently holding just business funds.
Then, input your Sources of Cash according to their categories, such as product (or service) sales, receivables, repayments from money you've loaned out, etc. Add additional categories in new rows if needed. The sum of these cash sources will appear as your Total Sources of Cash (line B).
Quick tip: If you're creating a cash flow forecast at any point in the year other than January, simply change the month labels at the top of the forecast.
Step 3: Input your uses of cash
Next, enter your cash outflows, or Uses of Cash. This is every expense your business may incur, including payroll, vendor payments, rent, utilities, loan payments, etc. Add additional rows as needed. The template will automatically sum up these cash outflows and provide your Total Uses of Cash (line C).
Step 4: Cash changes and your ending cash balance
To determine your Change in Cash During the Month (line D), the template will subtract your total uses of cash from your total sources of cash (line B - line C). This represents the change in your cash flow for the month—essentially comparing what you've spent versus what you've brought in.
To determine your Ending Cash Balance, the template adds your starting operating cash (line A) to the total change in cash flow (line D). This final number provides a clear snapshot of your financial standing at the end of the month and helps you assess whether you need to adjust your budgeting.
Step 5: Build out future months in your forecast
The ending cash balance from the previous step will be automatically populated as your beginning operating cash for the following month (the cash you finish with in January will be what you start with in February).
From here, you can either copy the dollar amounts of cash sources and uses over to future months, or only add them in the months you expect to receive or incur them.
You can make tweaks to certain expenses, or add in new expenses through the year and see how it impacts your cash balances in future months.
Tips for accurate cash flow forecasting
Cash flow forecasting can be complex, so keep these best practices in mind:
- Update historical months as they pass: To keep your forecast as accurate as possible, update the figures for your cash sources and uses (income and expenses) at the end of the month with their actual amounts.
- Commit to regular review: Your business is dynamic, which means your cash flow forecast should be as well. Review and update it regularly to ensure your projections are as accurate as possible.
- Consider seasonal variations: Always account for predictable fluctuations in your industry or business cycle based on seasonal events, such as holidays.
- Be realistic with your projections: Avoid overly optimistic estimates that could lead to poor decision-making. This is part of the reason why it’s crucial to regularly review and update your forecast calculations.
- Consult with a bookkeeping expert: Professional insights can help refine your forecasting accuracy, and provide guidance moving forward.
By leveraging Bench's free cash flow forecast template, you're taking a significant step towards financial clarity and business success. Download your template today and start transforming your financial planning.
How Bench can help with monitoring your cash flow
Bench Accounting provides U.S. small businesses with professional bookkeeping services and powerful software to view visual financial reports. With Bench, you can keep tabs on your small business financials with just a few clicks. Sign up today and receive a free month of bookkeeping with financial statements to keep. You can also request a free demo to learn more about how Bench’s dedicated bookkeeping experts can support the financial side of your business.
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