A cash flow forecast for a small business is a month-by-month estimate of the money coming into and going out of your bank accounts, starting from today's balance, so you see the month you run short before it arrives. The one-hour version has six lines: opening cash, collections from customers, other receipts, payroll, everything else you pay, and debt and tax payments. Collections come from the invoices already open and how fast customers actually pay, never from a sales target. Build it six months out, refresh it monthly, and if you own several companies build one column per bank account with a line for transfers between them.
What it is, and what it is not
A cash flow forecast is a forward-looking estimate of the cash coming into and going out of your bank accounts, built from what is already on the books rather than from targets.
A budget is a set of targets for revenue and expense, usually built once a year on an accrual basis, and it tells you what you meant to happen. A forecast tells you what is likely to happen to the bank balance given the invoices, bills and payroll that already exist. Budget vs actual is a different exercise.
The statement of cash flows in QuickBooks Online is history: it explains how last month's profit turned into last month's change in cash, and it is the report to read when you want to know why net income does not match the bank balance. It does not look forward.
The 13-week forecast, week by week, is the right tool when payroll is tight, when a lender has asked, or when the next ninety days decide something. The monthly version, six months out, is enough for a business that is not in trouble and wants to stay that way.
The six lines, with an example
Opening cash is the balance in every business bank account on the first of the month. Collections is the money customers will actually pay in the month. Other receipts covers anything else that lands, a loan draw or a tax refund. Payroll is wages and payroll taxes on the dates they leave the account. Everything else is rent, insurance, vendors, subcontractors, software and the owner's draw. Debt and tax is the loan payment, plus the estimated tax distribution in the months it falls due. Closing cash is the sum, and it becomes next month's opening line.
On April 26, 2026, the owner of a 28-person staffing and consulting firm sits down to build one. Opening cash on May 1 will be about $96,400. Open receivables total $188,200, and over the last six months 62 percent of what was open at month end has arrived within 30 days and most of the rest the month after. Payroll is $73,800 every other Friday, which puts three payrolls in May and again in October. Rent, insurance, subcontractors and the rest run $52,300 a month, with an $18,400 insurance renewal in July. The loan payment is $7,850. The owner's estimated tax distributions of $19,600 fall in June and September.
| May | Jun | Jul | Aug | Sep | Oct | |
|---|---|---|---|---|---|---|
| Opening cash | $96,400 | ($12,850) | $16,100 | $38,850 | $72,300 | $108,650 |
| Collections | $172,300 | $256,300 | $248,900 | $241,200 | $263,700 | $259,400 |
| Other receipts | $0 | $0 | $0 | $0 | $0 | $0 |
| Payroll | ($221,400) | ($147,600) | ($147,600) | ($147,600) | ($147,600) | ($221,400) |
| Everything else | ($52,300) | ($52,300) | ($70,700) | ($52,300) | ($52,300) | ($52,300) |
| Debt and tax | ($7,850) | ($27,450) | ($7,850) | ($7,850) | ($27,450) | ($7,850) |
| Closing cash | ($12,850) | $16,100 | $38,850 | $72,300 | $108,650 | $86,500 |
May closes at minus $12,850. The business is not losing money; by October it holds $86,500 and every month after May is positive. May has three payrolls and a light collection month, because March billings were thin and 38 percent of April's invoices will not arrive until June. An owner who sees this on April 26 has a week to do something about it; one who did not build the sheet finds out from the bank on May 29. The template is a spreadsheet with these six lines and six columns, nothing else: monthly cash flow forecast template.
Where each line comes from in QuickBooks Online
Opening cash is the bank balance in the chart of accounts, once you have checked the last reconciliation date. Collections come from the A/R Aging Summary: take the total, apply your collection rate for the first month and the remainder for the second, then add the invoices you will send this month at the same rates, one month later. The A/R aging report is the input that decides whether the whole forecast is any good. Payroll comes from the payroll provider's calendar; count the Fridays. Everything else comes from the A/P Aging for what is already owed and from last year's same-month P&L for the recurring items. Debt comes from the loan register, and tax from the set-aside schedule your CPA gave you in January. Type the assumptions. Copy the rest.
The three assumptions that matter
Collection speed, payroll dates and the lumps. Everything else can be last year plus a few percent and the forecast will still be right about the low month.
Collection speed is measured, never read off the invoice. Terms say net 30; the last six months of deposits say what customers actually do. Take the open A/R at the end of each of the last six months and the deposits in the following thirty days, and the ratio is your rate. If it is 62 percent, use 62 percent, and do not round it up because a big customer promised to do better. Payroll dates are known to the day, and a three-payroll month is the most common cause of a surprise shortfall in a biweekly business. The lumps are the estimated tax installments, the insurance renewal, the annual software bill, the truck, and they belong in the month they land at full size, never spread evenly.
A forecast that spends the hour on the collection rate and the payroll calendar will be closer than one that spends the hour on a revenue growth assumption.
Reading it
The reading is the low month and its cause. In the example the low month is May, the cause is three payrolls against a thin collection month, and the gap is about $13,000 plus whatever margin lets you sleep. Three levers close a gap that size. Collect faster: of the $188,200 open, the 38 percent past 30 days is about $71,500, and two phone calls that bring $20,000 of it into May solve the problem. Delay a purchase: anything in everything else that can move to June. Draw the line of credit early, in the first week of May rather than on the 28th, and repay it in June. The forecast tells you in April, so the choice of lever is yours rather than the bank's.
It will be wrong. A near-term collections line within about 10 to 15 percent of what actually arrives is as good as this method gets, and the months beyond three are rough. That is enough, because the forecast only has to say whether any month between now and October goes below zero. The most common advice, Shopify's July 2024 guide among the pages that rank for this question, is a rolling twelve-month forecast with a sales growth rate on top. We would build six months from the receivables instead, because months seven to twelve are made up. The Federal Reserve's 2025 Small Business Credit Survey of 7,653 employer firms found 56 percent had difficulty paying operating expenses in the prior year and 51 percent reported uneven cash flows; the 2016 JPMorgan Chase Institute study of 597,000 firms put the median cash buffer at 27 days, about one three-payroll month from a problem.
Several companies
With more than one company, build one column per bank account rather than one per company, and add a seventh line for transfers between them. A transfer from the operating company to the property LLC is an outflow in one column and an inflow in the other, and the two must match. A transfer is never income; a file that books it as income has overstated revenue in one company, and a forecast that puts it on the collections line has overstated the group's receipts by the same amount when the columns are added. The columns answer which company funds payroll this month, and whether it has the cash. A QuickBooks Community thread from December 2023 describes the alternative, one account shared by several businesses, as "reconciling QB against itself"; one company paying another company's bills covers the unwind.
Navigator's Pro plan rebuilds a 13-week cash plan and a rolling twelve-month forecast every morning from each connected QuickBooks Online file and its payroll, per entity and consolidated, so the hour becomes a read rather than a build; the base plan shows cash by account and the A/R and A/P aging for every company in the morning brief. The plans are on the pricing page. What no forecast can tell you is whether a customer will pay; it can only say what happens if they pay the way they usually do.
Keeping it alive
First of the month, thirty minutes. Replace last month's forecast column with what actually happened, roll the window forward one month, and re-read the low month. Forecast May against actual May is the most useful page in the exercise, because it says which assumption was wrong. If collections come in below the forecast three months running, the collection rate should come down, or one customer's habit has changed and the aging will show which. A forecast that is always wrong in the same direction has a wrong assumption in it, and the fix is to change the assumption rather than to add a cushion. A Bluevine survey of 774 owners in October 2025 found 39 percent held less than a month of operating expenses and 51.3 percent would tap reserves within 48 hours to make payroll, and the thirty minutes is what keeps that choice yours. Once the six lines are stable, how much cash reserve to hold sets the floor the closing line should never cross, and whether you can afford the next hire is the first question a working forecast answers well.
Questions owners ask
How do I create a cash flow forecast for a small business?
Start with today's balance across every business bank account. Add collections, taken from the open invoices and the share your customers actually pay within 30 days. Add any other receipts. Subtract payroll on its real dates, everything else you pay, and the loan and tax payments in the months they fall. The result is next month's opening balance. Do it for six months and look for the lowest one.
How far ahead should a small business forecast cash flow?
Six months, month by month, is far enough to see a shortfall with time to act and near enough that the numbers are mostly known. Go to a weekly 13-week version when payroll is tight, a lender is asking, or the low month is close. Twelve-month forecasts are common, but the second half is usually a growth assumption dressed up as a plan.
What is the difference between a cash flow forecast and a budget?
A budget is a set of targets for revenue and expenses, usually built once a year on an accrual basis; it says what you meant to happen. A cash flow forecast is an estimate of what will happen to the bank balance, built from invoices already open, payroll already scheduled and bills already owed. The budget is judged against actuals. The forecast is judged by whether it saw the short month coming.
How accurate should a cash flow forecast be?
For the next month or two, a collections line within about 10 to 15 percent of what actually arrives is as good as the method gets, and it is enough to catch a month that goes below zero. Months four to six are rougher and that is fine. The forecast is judging whether any month runs short, and if it is wrong the same way three months in a row, the assumption needs to change rather than the cushion.
Can QuickBooks Online forecast cash flow?
QuickBooks Online holds every input: the bank balances, the A/R and A/P aging, the payroll history and the loan register. Its statement of cash flows is history, and its cash flow planner projects from what the bank feed has already seen. Neither knows your payroll calendar, your collection rate or a tax installment that has not happened yet, so the six-line build still has to be done, in a spreadsheet or in a tool that reads the file.
Related
When the low month is close, the 13-week cash flow forecast is the weekly version that finds the exact Friday. The floor the closing line should stay above is the subject of how much cash reserve a business should have, counted in days rather than months. And since the collections line is most of the forecast, the A/R aging report explained is where to go when the 62 percent starts slipping.
If you would rather read the six lines each morning than build them on the first, the trial connects to QuickBooks Online in about fifteen minutes and needs no card: navigatorhq.ai.
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Published . Last updated . Reviewed by a CFO on the Navigator team.