A Beginner’s Guide to Cashflow Forecasting – Part 4

Welcome back! This is the final instalment in our beginners guide to cashflow series, where we’re taking a deep dive into the world of cash flow forecasting. In this post, we’re going to help you pull everything together and create your cashflow forecast. We’re also going to be looking into a few key differences for seasonal businesses, and how to plan for them. If you’ve not read the first 3 parts, you can find them here, here and here. If you’re all caught up, it’s time to wrap it all up.

Putting it All Together

Here’s the good news – you’ve done most of the hard work already! Everything you’ve written down from the previous parts can be divided up into ‘inflows’ and ‘outflows’. So, at a basic level, you’ll have:

Inflows:

• Product/service sales
• Asset sales
• Loan drawdown or other investment capital

Outflows:

• Operational costs and salaries
• Cost of sales
• Asset purchases
• Loan repayments
• VAT

Once you’ve added all of this together, you have a forecast of the balance in your bank account at the end of each month. Which means you have all the information you need to create a cashflow forecast.

A lot of businesses will opt to use spreadsheets to manage their cashflow forecasts, so here’s a basic guide for setting one up:

• In a new spreadsheet, set up the months as column headers along the top row
• Add a total column at the end of each year
• Set up rows for your inflows and outflows, separating them with one or more columns so they don’t get muddled up
• Break them down into individual rows, just as you did earlier in the process
• Add a total at the bottom of the inflow column
• Add another total at the bottom of the outflow column
• Add a final total at the bottom of the entire report, which calculates the net of the inflow and outflow
• Create a cash flow chart using the chart tools to visualise your forecast.

That last one is optional, but having a visual chart can really help some people to understand the data better.

Of course, if you don’t like spreadsheets or you aren’t great with numbers, there are software tools that can help you with the actual forecast bit. You still need to do the work, but they can collate the information into a forecast for you. There are a lot of different options out there, so try a few free trials and see what suits you. Most accounting software also offers this function, though it may be an additional cost, so don’t forget to check there.

Forecasting for Seasonal Businesses

Before we wrap up, there is one kind of business that cashflow forecasting is an absolute essential. Seasonal businesses. Any business that thrives at one particular time of year (for example Christmas, Easter, summer holidays, Valentine’s gifts). They will usually be very busy for 10% of the year, and have a large lull for the other 90%. That can make staying afloat and positive for that 90% very difficult! But there are some techniques that many seasonal businesses can employ to manage their cashflow through those tougher times:

• Find alternative business options or activities for the slower parts of the year
• Hire employees only during busy times and lay them off when the season ends
• Develop banking relationships that allow for the extra flexibility required
• Close their doors and reopen the next year for the busy season
• Save part of the earnings during the busy times to cover expenses during the slower parts
• Arrange for vendor relationships that allow them to make larger payments when cashflow is good, and lower payments when it’s slow
• Find ways to create off-season demand through partnerships with other businesses, by offering deals to local customers or by moving sales online

On top of these options, seasonal businesses also need to spend a lot of time nurturing their cashflow. These businesses often develop monthly sales spending and cashflow forecasts, with sales forecasts being built entirely on the cashflow forecasts. Cashflow will become the biggest driver behind spending, and changes will be carefully monitored. If you’re going down the route of shutting down for a large section of the year, your job actually becomes a bit easier, since you don’t need to estimate fluctuating year-round costs.

Cashflow forecasting may feel daunting at first, but once you break it down into inflows and outflows, the picture becomes much clearer. Whether you’re a year-round operation or a seasonal business navigating busy peaks and quieter troughs, a well-prepared forecast can give you the confidence to make better decisions, anticipate challenges, and protect your business from unnecessary financial strain. By treating your cashflow forecast as a living document—reviewing it regularly and adjusting it as circumstances change—you’ll be able to stay in control and build resilience, no matter what the year brings. Get in touch with our team at Debtcol today for a confidential consultation.