Profit is an opinion until cash arrives.

If you’re hiring, scaling delivery, or taking on bigger projects, cash timing becomes the constraint. A strong order book can still create a cash crunch.

Cash flow forecasting for limited companies doesn’t need a complex model. You need a repeatable process that is accurate enough to support decisions.

The only forecast that matters: the next 13 weeks

Annual cash forecasts look great but they get ignored. A rolling 13 week forecast stays close to reality and highlights problems early.

Why 13 weeks?

· It covers a full quarter of payroll cycles and supplier payments.

· It’s long enough to spot a cash flow squeeze before it hits.

· It’s short enough that you can keep it current.

The goal here is visibility and control.

Build the forecast in three steps

Keep your structure simple so that you can still keep close to the cash in busy periods.

Step 1: Starting cash

Use actual bank balances (all accounts).

Step 2: Known committed outflows

These are the payments that will happen unless you actively stop them:

· Payroll (net pay + employer costs + any payroll taxes)

· Rent, finance, insurance, key subscriptions

· VAT/PAYE in the UK, or equivalent periodic taxes elsewhere

· Loan repayments

Put dates on them. Cash is about timing, not categories.

Step 3: Expected inflows and variable outflows

This is where judgement enters, so make the assumptions visible.

Inflows:

· Invoices already issued: use expected payment dates based on customer behaviour, rather than invoice terms

· Pipeline receipts: only include what is genuinely likely, and note the basis

Variable outflows:

· Subcontractors and materials tied to specific jobs

· Large one-off purchases

· Planned hires (start date and total monthly cash outflow)

A weekly 30-minute routine that keeps it useful

Forecasts often don’t work because they become “a finance task”. Make it a leadership habit instead.

Weekly routine (same day each week):

1. Update starting cash from bank.

2. Mark receipts as paid or late. Move late items forward.

3. Update the next two weeks’ expected receipts (based on communication with your customers and expected patterns).

4. Add any new committed costs (purchase orders, hires, deposits).

5. Review the lowest cash point in the next 13 weeks and decide actions.

That’s it.

How to improve accuracy quickly

To create an accurate forecast, you don’t need to add complexity, simply tighten the inputs.

Use customer payment behaviour

If a customer usually pays in 45 days, set 45 days. Don’t pretend it’s 14 because the invoice says so.

Separate “will invoice” from “will collect”

A signed project isn’t cash. A sent invoice isn’t cash. Cash is when it hits the bank account.

Keep “possible” payments out of decision-making.

Treat tax as a planned cost

Many limited company owners feel a cash squeeze because tax accrual isn’t separated from operational cash. Tax timing can be chunky. Add taxes as explicit lines with expected payment dates.

What decisions a good forecast supports

A 13-week forecast supports your business growth decisions with less risk:

· Hiring: when you can take on the next hire

· Pricing and payment terms: when you need deposits or staged billing

· Supplier negotiations: when you can ask for better terms

· Dividend and bonus planning (where relevant): when cash can support it

· Capital purchases: when to buy vs delay

It also helps you spot when “growth” is a working capital problem.

Quick wins

· Create a single owner for the forecast.

· Add a line for top 10 customer receipts by expected date.

· Put VAT/PAYE/tax lines in the model the day you submit returns.

· Introduce deposits or staged billing on projects over a set size.

· Chase late payers weekly with an escalation rule after 14 days overdue.

Conclusion

Cash forecasting is a discipline. A rolling 13-week view, updated weekly, gives you control over timing, risk, and growth.

If you want help applying this to your numbers, book a call.