How to build a 12-month cash flow forecast

Wall Heel practical guide · Updated November 2026 · Examples are illustrative

Choose a starting balance

Begin with the money available at the beginning of your forecast. Distinguish business cash from money you expect but have not yet received.

List cash inflows by expected month

Use realistic collection dates for existing invoices, seasonal work, subscriptions or other revenue. A signed contract is not the same as money already in the bank.

List fixed and variable outflows

Separate recurring subscriptions, rent, insurance, debt payments, and expected one-time costs. Avoid counting a purchase both when it is planned and when it is paid.

Calculate the monthly ending balance

The simple formula is opening cash + cash received − cash paid = ending cash. The ending balance becomes next month’s opening balance. Example: $2,000 + $3,500 − $4,200 = $1,300 ending cash.

Test the bad month

What if a client pays 30 days late? What if sales are 20% lower? A forecast is most useful when it tells you where uncertainty could create pressure, not just when it shows a pleasant upward line.

Update assumptions monthly

Replace guesses with actuals and adjust the months ahead. This is a planning exercise, not financial advice or a live bank data feed.

This article is general educational material. Prices, forecasts and work processes should be adapted to your circumstances.

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