Cash flow forecast

Definition

A cash flow forecast is a projection of expected receipts and payments over a future period, revealing the anticipated cash balance at each point and highlighting any shortfalls. It's the single most useful management tool for avoiding a cash crisis.

In plain terms

It's a map of your bank balance for the months ahead — so a squeeze in, say, week nine shows up now, while you still have time to fix it.

Why it matters for your company

Forecasting turns cash management from reactive to planned, and arms you to arrange funding before you need it. See how to forecast cash flow.

In practice

Picture a small UK limited company with steady sales but bills that fall due before customer payments land. Without a forecast, the finance director only discovers a squeeze when the bank balance is already low. With a rolling forecast in place, that director can see the dip forming several weeks out — while there is still room to shift a supplier payment, chase an overdue invoice, or line up support — rather than reacting once the account is already under pressure.

Directors who keep the forecast current, rather than building it once and shelving it, get the most value: updating it as actual receipts and payments come in keeps the projection honest, and turns it from a one-off exercise into an ongoing planning habit that sits alongside management accounts.

How lenders read it

A cash flow forecast tells a lender how a company thinks about its own trading pattern — whether the business understands its seasonal peaks, its payment terms with customers and suppliers, and where the pinch points naturally occur. A forecast that is clearly grounded in the company's own sales and payment cycle, rather than a generic template, signals a director who is on top of the numbers.

It's worth noting that Creditcorp lends to the limited company itself, not to the individual behind it — see how we lend — so the forecast is read as part of building a picture of the company's own trading position, alongside the wider information a lender gathers before any funding conversation, as set out in the cash flow management guide.