The short answer
A simple cash flow forecast fits in a 13-week sheet: your starting balance, the cash you expect to collect (on the date clients will actually pay, not the invoice date), the payments you know are coming (rent, payroll, estimated taxes, suppliers), and the ending balance for each week. Updated every Monday in 15 minutes, it shows a cash gap one to two months before it hits, while you can still act.
We make Extra, an AI agent platform, so this article is written by an interested party. Facts about other tools and about the law come from the sources listed at the bottom, as of the date shown.
Why can a profitable small business run out of cash?
Because profit is counted when you invoice and cash when the money lands. A business that bills a lot in September but collects in November may not be able to make October payroll. Payment terms widen the gap: net 30 or net 60 is common between businesses, and US law sets no general deadline for business-to-business payments, so whatever your invoice and contract say is what you can enforce.
The SBA puts it simply: looking closely at money in and money out is what keeps a business sustainable, and someone has to own available cash, receivables and payables. A cash flow forecast is how you see those gaps before they hurt.
What does a simple cash flow forecast look like?
A sheet with one column per week for 13 weeks (a quarter) and five rows. No software needed: a spreadsheet will do.
- Starting balance: what is in the business account this Monday.
- Cash in: each invoice you expect, in the week the client will actually pay.
- Cash out: rent, payroll, payroll taxes, estimated taxes, suppliers, loan payments, subscriptions.
- Ending balance: start + cash in − cash out.
- Floor: the minimum you never want to go below (for example, one month of fixed costs).
A worked example: an HVAC contractor with one employee
Here are the first four weeks of October for a contractor starting with $9,000 in the bank. Amounts are rounded.
| Week | W1 | W2 | W3 | W4 |
|---|---|---|---|---|
| Starting balance | $9,000 | $10,300 | $8,200 | $4,100 |
| Customer payments | $3,200 | $1,800 | $900 | $4,500 |
| Rent and subscriptions | −$1,100 | −$200 | $0 | $0 |
| Suppliers (equipment, parts) | −$800 | −$3,700 | −$1,500 | −$600 |
| Payroll and payroll taxes | $0 | $0 | −$3,500 | $0 |
| Sales tax remittance | $0 | $0 | $0 | −$2,400 |
| Ending balance | $10,300 | $8,200 | $4,100 | $5,600 |
With a $5,000 floor, week 3 dips below it. The contractor sees it at the start of October and has three weeks to act: chase the $4,500 invoice due in week 4, push back an equipment order or ask for a deposit on the next install.
How do you build one in 30 minutes?
- Write down today’s balance in the business account.
- List unpaid invoices. Put each one in the week that client usually pays, not on the due date. A client who always pays three weeks late goes three weeks later.
- Add signed jobs you are about to invoice, with the same caution.
- List fixed costs with their dates: rent, payroll, loans, insurance, software.
- Add tax payments: payroll tax deposits, sales tax if your state collects it, and quarterly estimated taxes, which the IRS expects in April, June, September and January. These are the most forgotten and the least negotiable.
- Add planned purchases: equipment, inventory, a vehicle.
- Compute the balances and color in red every week below the floor.
Every Monday, replace last week’s estimates with the real amounts and add a week at the end. Fifteen minutes is enough.
Which mistakes throw a forecast off?
- Counting invoices on their due date instead of the date the client really pays.
- Forgetting sales tax: it passes through your account, but it isn’t yours.
- Mixing business and personal accounts, which makes any forecast unreadable. The SBA recommends a separate business bank account for this reason, among others.
- Being optimistic about new clients. Count only what is signed.
- Building it once and never touching it again. A forecast lives week to week.
What do you do when a cash gap shows up?
Act in this order, from cheapest to most expensive:
- Chase late invoices, politely but early. Our guide to chasing an unpaid invoice has the templates.
- Ask for deposits on new jobs.
- Push back spending that can wait.
- Ask a supplier for one-time extended terms.
- Talk to your bank about a line of credit before you need it, not after.
What can AI do for cash flow?
It is useful for the repetitive work: finding invoices in your email, computing each client’s real payment delay, filling in the sheet every week and flagging the week that drops below your floor. It is bad at guessing what isn’t written anywhere: a client about to lose a big contract, a job about to slip. That information is yours.
At Extra (hello-extra.com), that is the job of Oscar, the finance agent: he runs the numbers you give him, prepares the forecast and the reminders, and tells you plainly when a week looks tight. He never pays on your behalf. For the rest of your admin, read how to automate small business admin.
Also read: match payments to invoices every week.
