Why profitable businesses run out of cash
Profit and cash are different things. You can invoice a great month and still have nothing in the bank, because the customer pays in sixty days and the wages, super and GST are due now. Growth makes this worse, not better. More sales means more cash tied up before it's collected.
Then there are the lumps. Quarterly BAS. Annual tax. Insurance renewals. Loan repayments. Stock before a busy season. None of them arrive in neat monthly amounts, and most of them are predictable if someone is looking.
A cash flow forecast is that someone. It lays out the next weeks and months so the lumpy stuff stops being a surprise.
What goes into a cash flow forecast
A good forecast is built from real data, not round numbers. We start from your Xero file and layer in what we know is coming.
The result is a week-by-week or month-by-month view of the bank balance, with the low points marked. Those low points are where decisions get made.
- Opening bank balances and available facilities
- Expected receipts based on invoices raised, debtor history and pipeline
- Supplier payments, wages, superannuation and rent
- GST, PAYG withholding and instalments on their actual due dates
- Income tax, FBT and other lumpy obligations
- Loan repayments, equipment finance and planned capital purchases
- Owner drawings, dividends and distributions
Short-term and long-term cash flow forecasting
We generally run two horizons. The short-term forecast, often thirteen weeks, is the operational tool. It's about the next pay run, the next BAS, the next big supplier bill. It gets updated weekly or fortnightly and it's precise.
The twelve-month forecast is the strategic one. It ties to the budget, shows seasonality and tells you when you'll have room to invest or when you'll need a facility. It's less precise by nature but far more useful for planning hires, expansion and tax.
Businesses in a tight patch lean on the short-term view. Businesses planning growth lean on the long-term one. Most of our clients end up wanting both.
Using the cash flow forecast to make decisions
A forecast that sits in a folder is just a spreadsheet. The value is in the questions it lets you ask. Can we hire in March or should it be June? What happens if our biggest client goes to ninety-day terms? Is the overdraft big enough for the quarter? Should we put the tax bill on a payment plan or pay it from the buffer?
We run those scenarios with you. Change the assumption, see the bank balance move, decide. It turns a stressful guess into a calm comparison, and it gives you something concrete to show a lender if you need one.
Tayte from Alphaline Projects: "We have been working with Acquire Strategic Accounting for some time now, and we couldn't be more pleased." Forecasting is a big part of that relationship.
Cash flow forecasting for trades, franchises and NDIS providers
Some industries live and die by cash timing. Construction and trades deal with progress claims, retentions and subcontractor payments that rarely match up. Franchise operators juggle royalties, supplier terms and fit-out finance across sites. NDIS providers wait on plan-managed and agency-managed payments while paying staff fortnightly.
We've built forecasts for all of these across Brisbane, Logan and the Scenic Rim, and the templates reflect how the money actually moves in each. Real estate agencies, allied health and transport operators each have their own rhythm too.
How we build and maintain your cash flow forecast
First, the bookkeeping needs to be current, which is why forecasting usually sits alongside our BAS and bookkeeping service. Then we build the model, agree the assumptions with you and set the update rhythm.
From there it's a standing part of our virtual CFO work: refresh the figures, review the low points, adjust the plan. Meet us at Victoria Point, Jimboomba or by video from anywhere in Australia. If you're not yet a client, a forecast is a good first project: it shows quickly whether the numbers are telling you the truth.
Questions we get asked
What is a 13-week cash flow forecast?
It's a short-term forecast covering the next thirteen weeks, roughly one quarter, week by week. It's detailed and updated frequently, so it's the tool for managing payroll, BAS, supplier payments and overdraft limits in the near term. Many businesses run it alongside a twelve-month forecast for longer-range planning.
How is a cash flow forecast different from a budget?
A budget is a plan for revenue and expenses over a year, usually on a profit basis. A cash flow forecast tracks when money actually moves through the bank, including GST, loan principal, capital purchases and owner drawings that don't appear on a profit and loss. You need both, and they should agree with each other.
How often should the forecast be updated?
Short-term forecasts are best updated weekly or fortnightly, because debtor timing changes constantly. Twelve-month forecasts are typically refreshed monthly or at each BAS. The key is that the forecast starts from the real bank balance and current Xero data each time, not from last quarter's assumptions.
Can forecasting help with an ATO payment plan?
Yes. If you're behind on tax, a forecast shows what you can realistically commit to each month and demonstrates to the ATO that the plan is credible. It's generally easier to negotiate an arrangement with a forecast behind it, and much easier to keep to one. We can handle that conversation with you.
Do I need Xero for cash flow forecasting?
It helps a lot. Xero bank feeds and invoice data give the forecast a reliable starting point and make updates fast. If you're on another system, we can still build a forecast from your data, but part of the first conversation will be whether moving to Xero makes the ongoing process easier and cheaper.
