Cash Flow Forecasting and Working Capital
A rolling forecast of money in and money out, plus the working capital analysis behind it — because profitable businesses still run out of cash.
Profit and cash are not the same thing, and the gap between them is where businesses fail. A company can invoice a record month, book the profit, and still be unable to pay wages, because the invoice has 45-day terms, the stock was paid for in advance, and a BAS payment fell due in the same week. Profit is an accounting result. Cash is what the bank account actually holds on a Tuesday.
A cash flow forecast makes that visible far enough ahead to do something about it. The useful version is rolling and specific — expected receipts based on the actual debtor ledger and real payment behaviour, committed payments including wages, superannuation, loan repayments and tax, and the resulting bank position week by week. It gets updated as reality arrives, rather than being built once and admired.
What this covers
- Rolling cash forecastA forward view of receipts and payments, updated as actuals come in, so the projection stays connected to reality.
- Debtor analysisHow long customers actually take to pay, which customers are consistently slow, and what that costs in funding terms.
- Creditor and supplier termsUnderstanding the outflow side, including whether available supplier terms are being used or paid earlier than required.
- Tax and statutory timingBuilding activity statement, superannuation and income tax obligations into the forecast, since these are the payments that surprise people.
- Working capital cycleMeasuring how long cash is tied up between paying for something and being paid for it, and where that cycle can be shortened.
- Funding requirementIdentifying when and how much external funding may be needed, early enough to arrange it on reasonable terms.
Who this suits
Growing businesses. Where growth is consuming cash faster than it generates it — the position that catches successful businesses off guard.
Seasonal businesses. Where income arrives unevenly across the year but wages, rent and tax obligations do not.
Businesses under pressure. Where the near-term question is which payments can be met and when, and clarity is worth more than optimism.
How forecasting works
Map the cycle
How cash actually moves through this business — when customers pay, when suppliers are paid, and what is committed regardless.
Build the forecast
A forecast built from the real debtor and creditor ledgers and committed obligations, not from a revenue line divided by twelve.
Test the pressure points
Identifying the weeks where the position is tightest, and what happens if a major receipt slips.
Update and review
The forecast is refreshed against actuals on a set cycle, so it stays a decision tool rather than becoming a historical document.
Behind the forecast sits the working capital cycle: how long money is tied up in stock, how long customers actually take to pay, and how long the business takes to pay its own suppliers. Improving those is often more valuable than chasing revenue. Where the numbers point to structural decisions, that becomes business advisory; where they need to become targets and measures, budgeting and performance reporting.
Works well with
Common questions
How far ahead should a cash flow forecast go?
We are profitable. Do we really need this?
Can you talk to our bank for us?
Speak to a chartered accountant
Tell us what you need and we’ll let you know whether we can help, what it involves and what it costs — before you commit to anything.