Core tool
Cashflow Forecasting
see the cash trough before you hit it
what it is
See the cash trough before you hit it
You can have a budget that predicts a surplus and still run out of cash. A budget tells you how much income and expenditure you expect over the year; a cashflow forecast tells you when the money actually lands in — and leaves — your bank account. It shows your most likely balance month by month, so you can act before a shortfall arrives. This is the short version of the full Embrace Finance deck and its worked spreadsheet.
budget vs cashflow
Two different questions
A budget asks: how much?
A forecast asks: when?
how to build it
From budget to forecast
Take your budget, lay it out month by month, and place every receipt and payment in the month it really moves.
Start from the budget
Bring in expected income, expenditure and the resulting surplus or deficit (or estimate them if you have no budget).
Add opening and closing balance rows
These turn a budget into a cashflow.
A column for each month
One per month across the period you're forecasting.
Schedule by real-world timing
Place each receipt and payment in the month it hits the bank — not when it's earned or incurred.
Be prudent when unsure
Assume income at its latest likely date and expenditure at its earliest.
Enter the opening balance from your bank statement
Then let each month's closing balance carry forward to the next month's opening.
Check it
Do the totals reconcile to the budget, and does the closing position match the cash? If not, find out why.
how far ahead
Horizon and rhythm
Keep it rolling, and tighten the increments when things are tense.
Twelve months, rolling
Forecast at least twelve months ahead — the horizon trustees need to confirm you're a going concern. Each month, update to reality and add a month to the end.
Weekly or daily when precarious
When cash is tight, forecast in shorter increments — but it's intense work, so make sure it's peer-reviewed and supported.
Going concern
An accounting assumption that you'll keep operating for the foreseeable future, usually twelve months. Your cashflow forecast is the key evidence behind it.
questions to ask
Be curious about the numbers
Read a forecast in three layers — what, so what, now what.
What are the numbers?
Are the balances positive? How low do they get, and how soon?
So what does that mean?
Are we solvent? Does this need corrective action?
Now what do we do?
Pull income forward, push spend back, or arrange an overdraft?
what to watch for
Common mistakes
Head in the sand
Counting money you don't have
Optimistic timing
Leaving it too late
resilience
Why this matters
A resilient organisation is Intentional — it asks 'what if?' and 'what else?' about its financial future. A cashflow forecast turns that question into a month-by-month picture, and gives you time to act while you still have options. If a serious shortfall looms, take advice early and keep communication with funders and staff honest.
A note
This is a plain-language summary, not professional advice. UK charity finance rules change — check the current Charity Commission guidance, and get qualified advice for your own situation.