If the words “cashflow forecasting” make your eyes glaze over, you’re not alone. But I’ll tell you now, it’s one of the single most important skills a founder can master, especially if they don’t have a Finance leader in-house. Cashflow forecasting explained properly is not about spreadsheets for the sake of it. It’s about visibility, control, and staying alive long enough to grow. Every successful founder I work with knows this: your cash forecast tells you whether you’re building something sustainable or quietly steering toward a crash.
And no, your accountant is not going to manage this for you. Neither is your bookkeeper.
Let’s break it down in a way that actually makes sense.
Why Cashflow Forecasting Matters (More Than Your P&L)
Your Profit & Loss might look great, as you may be “profitable” on paper or close to breakeven or even just showing incredible growth month on month, year on year. But if your customers are paying late, or you’re buying stock six months ahead, or your cash conversion cycle is negative, or you have a heavy loan to pay back, you can still run out of cash.
Your cashflow forecast is your real-time warning system. It helps you:
- See when things will get tight
- Play for monthly payroll, repayments and even investment
- Avoid panic fundraising (and accepting terrible terms from investors or lenders)
- Make informed and better decisions around hiring, product investments and marketing
Good founders watch their cash weekly. Great founders forecast it and make strategic decisions from it.
Cash In, Cash Out. Cashflow forecasting explained.
Let’s simplify what a cashflow looks at, especially when looking at a weekly forecast.
A cashflow forecast looks at:
- Cash coming in: from customers, loans, grants, investments
- Cash going out: payroll, marketing costs, rent, subscriptions, inventory, tax, debt repayments, general overhead expenses, credit card repayments
It maps when those cash movements actually hit your bank account(s), not when you send an invoice or receive a bill. That’s the difference between a cash forecast and your P&L.
This matters hugely if:
- You offer payment terms (so you send an invoice to customers, and they pay you 30-60 days later)
- You pay suppliers upfront (annual upfront subscriptions? Direct debits or debit card payments before receiving the goods or services, inventory prepayments, Social media prepayment before making any sales, etc)
- You’ve got lumpy sales or seasonal income – especially if you have to pay huge amounts in goods or services before selling – this is particularly relevant for R&D heavy companies, such as Tech SaaS.
- This is ultimately your cash conversion cycle.
How Far Out Should You Forecast?
There’s no strict rule, but here’s what I recommend to all of our clients:
- 13-week rolling forecast: short term, used weekly, for day-to-day planning. This is particularly important if cash is tight, or you have to make some big decisions.
- 12-month forecast: monthly view, useful for strategic planning and runway visibility. This also helps with longer term cash decisions that take quite some time to implement, such as preparing for a fundriase.
The 13-week view is your control view and helpful for payment runs and sales conversations. The 12-month forecast is for board meetings, investor conversations, and planning for fundraising or expansion.
What Successful Founders Do Differently
From working with many founders, as well as implementing cashflow forecasts that work directly, here’s what the best ones have in common when it comes to cashflow forecasting:
- They actually use it
It’s not just built once and forgotten. It’s updated weekly or monthly and used to drive decisions. With clients, we discuss plans with the cashflow forecast open and adjusted where relevant. - They involve their team
Operations, marketing, tech & product – the leaders of these departments all feed into expected spend, particularly when its tight. - They challenge assumptions. This is where it’s great to have multiple people reviewing it.
Questions such as, Do we really think that invoice will be paid in 7 days? Can we implement a discounted, 12 months subscriptions paid upfront instead of monthly subscriptions?
Can we delay this hire by one month to preserve cash? Are we able to reduce inefficient marketing spend or marketing tests until we have a little more buffer? - They look for scenarios.
They don’t just build one forecast. Instead, they build a base case, a stretch case, and a worst case. And then they plan accordingly. - They get ahead of problems
Forecasting highlights issues before they become disasters. It gives founders time to fix things, not react when it’s too late.
How to Build One Without Fancy Tools
I will go through this in detail via a YouTube clip (posted below), which will be easier to follow and the cashflow forecast is explained.
However, it might be worth saying, that you can start in Google Sheets or Excel. Most good forecasts are built there first. (then upgrade to a simple tool / software later on)
Here’s a simple structure:
- Rows: cash items (income and spend)
- Columns: weeks or months
- Totals at the bottom
- Running cash balance line at the very end
- Use formulas to automate sums and flag low cash balance periods.
What Investors Look for in a Cashflow Forecast
If you’re preparing to raise, this bit matters. In general, you would use your monthly forecast that is built off the back of a P&L and Balance Sheet (and therefore feeds from these two statements and balances). Often, it’s best to use a Fractional CFO to help with this – book a call with us to discuss this, if this is something you want to investigate.
However, in general, Investors want to see:
- That you know your numbers an you understand where the challenges are and your cash conversion cycle
- That your assumptions are realistic and you don’t go from zero to hero overnight.
- That you understand your cash runway
- That you have a plan if growth is slower than expected
A founder with a clean, updated cashflow forecast earns instant credibility and potential investors will be more likely to trust your numbers and trust your commercial story.
Cashflow forecasting isn’t something that accountants only care about. It’s a strategic forecasting tool that helps founders manage their business properly, allocate resources efficiently an keep the business afloat.
This is one of the main tools that founders (and CFOs) use to ensure that decision making is more proactive, rather than reactive. You just need to care enough to build it and keep it updated.
If you want help building your forecast, setting up a finance function that gives you real visibility, or preparing for fundraising, we do this every day at Fast Growth Consulting.
👉 Book a free discovery call here