Quick answer
A cash flow forecast is a projection of the money a business expects to receive and pay out over the coming weeks or months, ending with an estimated bank balance for each period. It shows in advance when cash will run short or build up. Australian lenders, especially banks, often ask for one to see how a new loan's repayments will fit around normal trading.
Key points
- It looks forward, while a cash flow statement usually records what has already happened
- Each column ends with a closing balance that becomes the next column's opening balance
- A rolling 13-week version is the common tool for spotting a shortfall a quarter ahead
- Lenders read it for realism: assumptions that match your bank statements earn trust
“Will we have enough in the account on the 28th?” A cash flow forecast is how you answer that question before the 28th arrives. It’s a forward-looking table of the money you expect to receive and spend, period by period, finishing with the bank balance you expect to be left with at the end of each one.
What goes into a cash flow forecast?
The layout is the same whether it’s built in a spreadsheet or in your accounting software. Each column is a week or a month. Down the side sit the categories of money arriving and leaving.
- Opening balance: the account balance on day one of the column.
- Cash in: customer receipts (when you expect to be paid, not when you invoice), plus grants, asset sales and any loan funds.
- Cash out: wages and super, rent, suppliers, loan repayments, insurance, GST and PAYG on your BAS, and owner drawings.
- Closing balance: start with the opening figure, add receipts, subtract payments. That figure carries across as the next column’s opening balance.
The free template on business.gov.au follows this pattern and can be used for actual figures or estimates. The single most important habit is to be honest about timing: if a customer usually pays in 45 days, forecast 45 days, even if your invoice says 14.
Why the 13-week rolling forecast is popular
Accountants and turnaround advisers lean on the 13-week version for a simple reason: a quarter is long enough to see a BAS payment, a payroll peak or a large supplier bill coming, yet short enough to forecast with real confidence. Each week you drop the finished week, add a new one at the end and compare what happened with what you predicted. Over time the gaps between forecast and actual tell you which assumptions to fix.
A 12-month monthly forecast is better for big decisions such as hiring, buying equipment or applying for a term loan.
Worked example: a Hobart café heading into winter
A café owner expects takings to fall from $62k in March to $41k in June as tourist numbers drop, while wages ease only slightly. Their simple forecast looks like this:
| April | May | June | |
|---|---|---|---|
| Opening balance | $18k | $9k | $2k |
| Cash in | $52k | $46k | $41k |
| Cash out (incl. April BAS) | $61k | $53k | $48k |
| Closing balance | $9k | $2k | –$5k |
The forecast shows the problem in March, three months early. The owner now has choices: trim rosters, negotiate supplier terms or arrange a modest facility before June. Our cash runway calculator runs a quick version of this sum. When seasonal dips are the issue, see business loans for seasonal businesses.
If your forecast already shows a red number, a short no-obligation enquiry is a sensible next step.
How lenders use your forecast
Banks often ask for a forecast alongside financial statements and a business plan, particularly for new businesses or larger loans. They test two things: whether the assumptions match your trading history, and whether the closing balance stays positive once the new repayments are added. That second test is about serviceability.
Many non-bank lenders rely more on bank statements and BAS than projections. Even so, a forecast helps you size the request properly: ask for too little and you may need a second loan within months; ask for too much and you carry interest on idle funds. For a timing shortfall, compare cash flow finance and funding options for a cash flow gap.
Related terms: cash flow, cash flow statement, working capital.
Spotted a shortfall on the horizon?
The best time to arrange funding is while your forecast still has a few weeks of breathing room. Tell us the month the balance dips and roughly how much you’ll need. The form is quick, about a minute of typing, and submitting it leaves your credit history untouched. We won’t scatter your application across a crowd of funders; one of our people reviews it personally and calls. Give us realistic turnover and repayment figures, because the closer they are to your books, the better our first suggestion will be.
Frequently asked questions
How far ahead should a cash flow forecast go?
For managing day to day, a rolling 13-week forecast, updated weekly, is the most practical. For a loan application, banks commonly ask for 12 months, sometimes split into months for the first year and quarters after that.
Is a cash flow forecast the same as a budget?
Not quite. A budget sets targets for income and spending, usually on an accrual basis. A forecast predicts when cash will actually land and leave, so it includes GST, loan repayments and the delay before customers pay.
Should the forecast include GST?
It can either include or exclude GST, as long as you say which. Including it is usually more useful for cash planning, because GST collected sits in your account until it's paid on your BAS.
Do non-bank lenders need a forecast?
Many don't. Plenty of non-bank and online lenders assess the application from bank statements and BAS instead. A forecast still helps you pick the right loan size and repayment schedule, even if nobody asks to see it.
What makes a lender doubt a forecast?
Sales growth well above anything in your history, costs that don't rise with sales, no allowance for tax and super, and customers assumed to pay faster than they do now. Lenders compare your forecast against your actual bank statements.