Build a simple cash flow forecast for an SME

Start with today’s actual balance

The best way to forecast cash flow for an SME is to start with a clear view of cash today. Don’t use an “approximate” balance: take the money available in the bank and in cash as your starting point.

From there, forecasting isn’t about guessing the future, but organising what you know: expected receipts, committed payments and likely dates. A sound starting point makes the rest of the forecast far more useful.

Set a short horizon: 8 to 12 weeks

For an SME, an 8-to-12-week horizon is usually enough to spot cash flow pressure without making the work too complex. It’s a practical timeframe that shows the impact of unpaid invoices, payroll, taxes and upcoming supplier bills.

Look too far ahead and the forecast loses accuracy. Look only a few days ahead and you have no time to react. So work in weeks and review the document often.

List expected receipts and assign a probability

For receipts, don’t just write “pending sales”. Be specific: issued invoices, customers with upcoming due dates, recurring receipts and other expected income. Then assign each receipt a simple probability based on its status.

— High: receipt is confirmed or the customer pays regularly.
— Medium: invoice issued, but payment may be delayed.
— Low: depends on a sales decision, signature or milestone not yet agreed.

No need for complex formulas. Just be cautious: if a receipt isn’t certain, don’t treat it as money already in the account.

Include all committed payments

Your forecast should include every payment already committed or very likely to go out. This includes payroll, rent, loan payments, suppliers, insurance and tax bills. If dates matter, check the current official AEAT (Spanish Tax Agency) calendar so you don’t assume a date that may change.

It also helps to separate fixed and variable payments. Fixed costs make planning more stable; variable costs, such as purchases or one-off services, need closer monitoring as they can change cash from one week to the next.

Build a simple weekly table

You can make a forecast in a spreadsheet with a basic structure:

— Opening balance for the week.
— Expected receipts, split by probability if you want to be cautious.
— Expected and committed payments.
— Estimated closing balance.

Repeat the calculation each week across your chosen horizon. You’ll see not only whether cash will hold up, but exactly when a shortfall may arise. That’s the most valuable part for making timely decisions.

Review it weekly and watch for cash flow gaps

A cash flow forecast is only useful if you update it. Set aside time each week to check what’s changed: delayed receipts, earlier payments, new costs or sales that haven’t come through.

The most common warning signs are easy to spot: several customers paying late, suppliers asking for advance payment, a drop in recurring receipts or a week when the closing balance gets too close to zero. If you see one, don’t wait for the problem to grow.

What’s worth automating

To save time, automate repetitive, reliable tasks: invoice due dates, payment reminders and connected bank transactions, so you can see recent money in and out without entering data by hand. This doesn’t replace judgement, but it does cut errors and admin.

What shouldn’t be fully automated is interpretation. The forecast needs human review to adjust probabilities, prioritise payments and decide what to do if a shortfall appears.

To get started today, make a table with your actual balance, the next 8–12 weeks and three sections: receipts, payments and closing balance. That will give you a…