A cash-flow forecast answers a simple question: if the money we expect arrives when we expect it, can the business pay what is due? For a new business, that answer is often more useful than a perfect profit forecast.
Build a 13-week view
Create one column for each week and start with the bank balance you can actually use. Then list expected cash in and cash out by date. A 13-week view is long enough to see tax, payroll, supplier and loan pressure without pretending you can predict the whole year.
Include:
- customer receipts, with realistic payment delays
- deposits, grants or finance only when they are genuinely likely
- wages, contractor payments and KiwiSaver
- rent, software, insurance and regular overheads
- stock, equipment and one-off purchases
- GST, provisional tax, PAYE and other amounts due
Do not put an invoice in the forecast on its due date if the customer normally pays 20 days late. Use the date cash is likely to hit the bank.
Separate profit from cash
Sales can make the profit report look healthy while cash is tied up in unpaid invoices. A loan can increase cash without being income. A GST payment reduces cash but is not an operating expense in the same way as rent.
Keep a note beside each large movement explaining what it is. That makes the forecast easier to update and easier to challenge.
Use three scenarios
Start with a realistic case, then create a slower-sales case and a delayed-payment case. You do not need complex probability modelling. The purpose is to see how much room is available before a payment becomes difficult.
If the downside case creates a cash gap, choose an action before the gap arrives:
- invoice earlier or ask for a deposit
- follow up overdue accounts
- delay a non-essential purchase
- renegotiate supplier timing
- reduce drawings temporarily
- speak with the bank or Inland Revenue early
Review it every week
Compare forecast with actual bank movements. Replace estimates with known amounts and move invoices when the expected payment date changes. The forecast becomes valuable because it gets corrected, not because the first version was perfect.
Keep GST collected and payroll deductions separate from cash available for operating costs. If taxable turnover may reach $60,000 in a rolling 12-month period, include the likely GST effect and check whether registration is required.
A cash-flow forecast is a planning tool, not a promise. This article is general information and does not replace advice based on your records.
Make the next step practical
Use the ideas here as a starting point for a better conversation. The right answer depends on your records, timing and circumstances, so keep the assumptions visible and revisit them when something changes.