Accounting and finance
Cash flow and budgeting
Do you need a cash flow forecasting or budgeting tool, and how far ahead should it look?
Six short steps. No email or account.
- Who needs it
- Businesses with lumpy revenue, long payment terms, seasonal cycles, or payroll obligations that arrive whether customers pay or not.
- When it matters
- Once payroll or a loan payment is a fixed monthly obligation.
- Compare first
- Forecast versus report
- Matters most when
- growing, mature
Is this the right tool for you?
A profitable business can still run out of cash when customers pay late, big bills land together or a slow season arrives. Cash flow planning shows what is coming in and going out over the coming weeks and months, so you can move a purchase, chase a payment or arrange credit before the account gets tight.
Signs you need it now
- You check the bank balance before deciding whether to pay a bill.
- Payroll or tax payments have caught you short.
- Slow seasons are a surprise every year.
- You are not sure whether you can afford a hire or a new vehicle.
When another area fits better
- Your books are not current, so any forecast would be built on guesses. Read the accounting software guide
- You already know the gap and need to arrange financing for it. Read the credit and financing guide
Recognise two or more of these? Sort out cash flow and budgeting next.
Tell us how your business runs and get a plan that puts cash flow and budgeting in order with everything else: what to set up first, your must-haves and what to compare.
What matters at your size
Working alone
A simple weekly view of expected income and known bills, often a spreadsheet or a feature of your accounting software, is enough.
A small team
A rolling forecast of several months that pulls from your accounting, with scenarios for a new hire, a big job or a slow season.
Several teams or locations
Budgets by department or location, comparisons of actual against budget, and forecasts your lender and advisers can review.
How the way you work changes the choice
- Seasonal trades: landscaping, pools, snow, roofing
- Plan the year, not just the month: build reserves in the busy season and know when the slow months begin.
- Project work with deposits and progress payments
- Cash arrives in lumps tied to milestones, while materials and labor go out earlier. Forecast by job, not only by month.
- Shops with stock
- Buying inventory ties up cash before it sells. Plan purchases around expected sales and supplier terms.
- Firms on retainers and monthly billing
- Income is steadier, so the focus is on how long clients take to pay and the timing of payroll and tax.
What to compare
Forecast versus report
Looking backwards is common; projecting forwards is what you are paying for.
Scenario modelling
Can you model hiring someone, or losing a big client?
Data source
Pulling from the bank, the books, or both changes accuracy considerably.
Cost and setup effort
- Many accounting products include basic forecasting. Dedicated tools add scenarios and deeper reporting, usually as a separate subscription.
- The effort is keeping it current. A forecast updated weekly is useful; one built once and ignored is not.
Trade-offs to weigh
- Spreadsheet or dedicated tool
- A spreadsheet is flexible and free but manual. A tool connected to your accounts updates itself but costs money and may not fit your seasonality.
- Do it yourself or with an adviser
- Building the forecast yourself teaches you the business. A bookkeeper or accountant can set it up and review it, which helps when you need to show a lender.
When to sort it out
Once payroll or a loan payment is a fixed monthly obligation.
Your next step
Answer six short questions about how your business runs. You get an operating plan: where cash flow and budgeting fits among your priorities, the must-haves to hold every option to, and what to compare when you choose.
Where this comes first
Trades and businesses that usually sort this out early.
- Landscaping and lawn care
- General contracting
- Specialty trade contracting
- Staffing and recruiting
- Lodging and short-term rental
- eCommerce store
- Amazon and marketplace selling
- Trucking and freight
- Manufacturing and production
- Wholesale and distribution
- Agriculture and field operations
- Creators and media businesses
Often decided alongside
Other parts of accounting and finance.