Cash Flow Projection: No Forecast Without Due-Date Data
Which data does a cash forecast need?
The forecast has four inputs: open receivables with due dates, open payables with due dates, bank balances, and recurring fixed payments such as payroll, rent, tax and loan instalments. If one is missing, the output is not a forecast but a table that looks like one. In practice the most commonly missing item is an unfilled due-date field.
Due date and collection date are not the same
A forecast that assumes invoices are paid on their due date will not match reality. Derive a delay profile per customer from history: over the last twelve months, how many days after the due date did this customer pay on average, and with what variation? Build the projection on due date plus that customer's average delay. This single correction noticeably improves weekly accuracy.
Calculate the profile only for customers with at least three payments in history; for new customers use a segment average and make that assumption visible in the report.
Model cheques and notes separately
Cheques and promissory notes behave differently from invoices: they can be endorsed, they can bounce, and they may sit in portfolio or as collateral. Cash forecasting needs separate status tracking for them — in portfolio, presented for collection, endorsed, and dishonoured are distinct items. Adding them all together as "receivables" biases the forecast optimistically.
Building the scenario analysis
Three scenarios are enough, each changing one variable explicitly: a base case where current delay profiles continue; a pessimistic case where the three largest customers pay a defined number of days later; and a stress test where the largest customer's payment is fully delayed and the uncollectible cheque ratio rises. The value of a scenario lies less in "what happens" than in "which week does the gap appear", because that week sets the deadline for the decision you have to take today.
Do not enter bank balances by hand
A forecast with manually entered balances stays correct for at most a day. Automatic statement retrieval and matching of collections to customer accounts is therefore a precondition of cash management; the matching rules are covered in our [bank integration guide](/en/blog/bank-integration-guide).
Make the report readable
A cash report becomes decision-ready when presented in weekly columns: opening balance, expected collections, expected payments and closing balance for each week, with any week whose closing balance turns negative clearly flagged. Monthly totals hide mid-month squeezes.
Frequently asked questions
How far ahead should the forecast run?
Thirteen weeks — one quarter — is a common and practical horizon. Longer horizons accumulate assumption error; shorter ones leave no time to act.
How is forecast accuracy measured?
Each week, compare the previous week's forecast with actual collections and record the deviation as a percentage. Without tracking the deviation trend you cannot tell whether the model is improving.
How are VAT and tax payments included?
As fixed calendar items tied to filing periods. These usually coincide with the weeks where a gap appears, and omitting the calendar is the most common blind spot in cash forecasting.