Follow the movement of money
Customer payments, borrowing and owner contributions can bring cash in. Supplier payments, wages, equipment purchases, debt repayments and owner distributions can take it out. Those movements do not all have the same treatment on an income statement.
Start a forecast from a reconciled opening balance. Use expected collection dates rather than assuming that every invoice will be paid immediately. Put known payments against their actual expected dates, and identify estimates separately.
A simple timing example
Imagine a business pays $4,000 for materials in one week and expects the associated customer payment two weeks later. The work may earn a margin overall, but that does not fund the two-week gap. The example is about timing, not an assumption that the sale is profitable or collectible.
A forecast helps you see the gap before a payment is due. It also makes the consequences of a late customer receipt visible while there is still time to discuss options.
Use scenarios instead of one reassuring number
Compare the expected case with a delayed-collection case. Include tax, payroll and supplier commitments, and check which forecast amounts are already reflected in the opening balance so they are not counted twice.
Review the forecast when circumstances change. A cash runway calculator can be a useful starting point, but a flat monthly average cannot capture every seasonal payment or large one-off receipt.
Sources & editorial notes
Sources checked October 23, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Cash flowBDC
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.