A practical cash-flow review for small businesses

A cash-flow review helps a business plan the timing of money coming in and going out. It is particularly useful when customers pay after an invoice is issued or when several large bills fall due close together.

Begin with the cash available

Use reconciled bank balances as your starting point. List accounts separately where that makes restrictions or payment arrangements clearer. If some funds are reserved or restricted, identify them before treating the total balance as available for general spending.

Choose a forecast period that matches the decisions you need to make. Weekly detail may help with a tight payment schedule; a monthly view may be more useful for longer-term planning.

Use realistic receipt dates

Review unpaid sales invoices and estimate when each significant receipt is likely to arrive. Base assumptions on agreed terms, recent payment patterns and any current dispute or delay.

Keep uncertain receipts visible. Moving an overdue invoice into next week’s forecast without further evidence can make the position appear healthier than it is. Give someone responsibility for checking the assumption with the customer.

Include the full payment schedule

List payroll, suppliers, rent, finance payments and other planned outgoings. Include tax payments using the amounts and dates confirmed for your business, rather than a generic estimate. Add one-off costs such as equipment purchases or annual renewals.

Avoid counting the same commitment twice. A supplier payment may already be included in outstanding purchase invoices, even if it also appears on a separate spending plan.

Worked example: a positive closing balance can hide an earlier shortfall

This illustrative four-week forecast is for a UK small business, in pounds sterling. It starts with £12,000 of available cash and assumes no overdraft, new borrowing or other cash movements. Receipts and payments below are total cash movements, not sales or profit figures.

Week 1: £12,000 opening cash + £0 receipts − £14,000 payments = −£2,000.

Week 2: −£2,000 + £18,000 receipts − £4,000 payments = £12,000.

Week 3: £12,000 + £6,000 receipts − £7,000 payments = £11,000.

Week 4: £11,000 + £4,000 receipts − £8,000 payments = £7,000.

Across all four weeks, receipts total £28,000 and payments total £33,000: £12,000 + £28,000 − £33,000 = £7,000. That positive final figure hides a £2,000 shortfall in week 1. The negative forecast is an unfunded gap, not permission to overdraw the bank account; later receipts do not make the first week’s payments possible as planned.

If management chooses a £3,000 minimum cash buffer, the first-week gap to that buffer is £5,000. The buffer is an illustrative business assumption, not a statutory requirement. Identify which payments fall due on which days and investigate realistic options before the shortfall; do not simply shift a supplier payment without agreement or treat an unconfirmed customer receipt as certain.

Check daily timing within a tight week too. The British Business Bank forecast guide explains building a running cash balance from the expected timing of receipts and payments.

Test a delay

Create a second version of the forecast with one plausible change, such as a major customer paying later. Compare the lowest expected cash balance and identify the date when a decision would be needed.

The purpose is to expose assumptions early. It does not make the forecast certain or determine which funding arrangement is suitable for your business.

Update and act

Compare actual receipts and payments with the previous forecast. Explain significant differences and adjust the next version. Agree actions, owners and dates for issues such as overdue invoices or spending approvals.

1. Close the completed week: reconcile actual cash movements to the bank and retain the previous forecast for comparison. Do not overwrite it before recording what changed.

2. Separate timing from a changed amount: a customer payment that moves into next week is different from a cancelled invoice. Move the existing receipt once; do not leave it in both weeks. Record the evidence, amount and revised date beside the assumption.

3. Refresh the decision list: record the lowest projected balance, first shortfall or buffer breach, action owner and decision date. Update the forecast after an action is agreed, not merely discussed.

Review the assumptions when the business changes, including payment terms, stock and major spending. ICAEW’s cash-flow guidance explains why the underlying inputs and regular review matter.

Choose the right starting tool

KBA’s free cash-flow and fundraising Excel model provides a 12-month monthly starting point. Use a separate weekly or daily schedule for periods where payment timing is tight; a monthly closing balance does not show every shortfall within that month. For investment timing, see the funding-round delay example.

For a model built around your actual business, explore financial modelling and fundraising support or request a consultation. Summarise the decision, forecast period and records available. Keep bank statements, financial records and identifiers out of the initial enquiry; agree document sharing separately.

Planning guidance for UK businesses; sources checked on 9 September 2026. The example is hypothetical, not client work, a tax calculation or a funding commitment. Use the applicable tax amounts and payment dates confirmed for your own business.