Log in

An introduction to cashflow forecasts

Clear Books Videos Banner


A cashflow forecast is a tool used to show the timings of cash inflows and outflows of a business over a specific period. This makes it easy for you to see what your bank balance is likely to be at any particular point in time.

To generate a cashflow forecast, you take a period of time (for example, one year). The cash flow is split into two sections: Income and Expenses. Each section is then totalled at the bottom and the net movement is calculated. For instance, say you predict to pay £10,000 into your bank in January, you would record that in the income section.

Next you need to record your expenses. This can include advertising, accountancy fees, bank fees, tax, direct expenses, wages, general expenses, rent, telephone & internet, among others. After you’ve added your expenses, you need to enter your opening bank balance for this month—this is the balance before any cash inflows or outflows.

Now to get your cash flow, take your total income and subtract your total expenses—this gives you your net movement. Then add this to your opening balance and you have your closing balance. The closing balance is transferred to the next month as the opening balance.

Now complete this figures for each month, and you have a one year predicted cashflow forecast. This can be very useful for predicting cash surpluses or shortages and help you make important business decisions.

To get more information about this, please contact us using the details shown on screen.

ICB accreditation

Clear Books, accredited by The Institute of Certified Bookkeepers and registered with the Financial Conduct Authority (reg. no. 843585), delivers valued, comprehensive online accounting software for small businesses in the UK.