Predicting what is in the account.
WHAT IT SHOWS
Money in, money out, and the balance, week by week or month by month.
WHY IT MATTERS MOST
It is the only tool that warns you before you run out.
WHAT TO LIST AS INFLOWS
Customer payments, when they will actually arrive Any other receipts
WHY WHEN THEY ACTUALLY ARRIVE
Invoicing is not receiving, and the gap is where businesses fail.
WHAT TO LIST AS OUTFLOWS
Wages and statutory remittances Suppliers Rent and utilities Loan repayments Tax Owner drawings Everything else
WHAT PEOPLE FORGET
Tax falling due
Annual payments: insurance, licences, subscriptions
Loan capital, as distinct from interest
WHAT TO CALCULATE
Opening balance, plus inflows, minus outflows, giving the closing balance.
WHAT THAT CLOSING BALANCE BECOMES
The next period's opening balance.
WHAT TO LOOK FOR
Any period where it goes negative.
WHAT TO DO ABOUT IT
Act before it arrives: accelerate receipts, delay payments, arrange facilities.
WHY BEFORE
Options exist weeks ahead and disappear on the day.
HOW FAR AHEAD TO FORECAST
Far enough to act: several months at minimum.
HOW OFTEN TO UPDATE
Weekly, when cash is tight; monthly otherwise.
WHAT TO COMPARE
Forecast against actual, every period.
WHY
It is how the forecast becomes accurate.
