Le cash plan This is the table that forecasts, month by month, all the company's cash inflows and outflows. It's the number one tool for anticipating difficulties, proving the viability of a project in a business plan, and managing available cash on a daily basis. This guide explains how to build a reliable cash flow forecast, with a simple template to reproduce in Excel.
What is a forecast cash flow plan?
The projected cash flow statement is a table that lists, in twelve monthly columns, all of the company's cash inflows and outflows: sales receipts, capital contributions, loans, and subsidies on the cash inflow side; purchases, salaries, rent, VAT, taxes, and loan repayments on the cash outflow side. The difference gives the monthly cash balance, accumulated over time.
At the company's inception, the projected cash flow statement complements the income statement and financing plan in the business plan: it demonstrates that the business can continuously pay its debts and meet its obligations, whereas the income statement only shows annual profitability. A company that appears profitable on paper can fail due to a simple payment delay; this is precisely what the cash flow statement reveals.
Why this chart is essential
First use: anticipation. The cash flow forecast identifies periods of negative balance before they occur, allowing time to plan for short-term financing, postpone an investment, or follow up with clients. Second use: decision-making. Hiring a new employee, making a major purchase, or moving to new premises: each business scenario can be tested in the forecast table, taking into account its actual impact, month by month.
Third use: to convince. Banks, investors, and accountants read the cash flow forecast to assess cash flow needs, financing, and the soundness of management. A well-constructed projected cash flow statement, with clear assumptions, inspires confidence in the company and facilitates obtaining credit at the right time.
Creating a cash flow plan: the 5-step method
1. List the cash receipts. Revenue received (note: inclusive of VAT, and at the time of actual payment, not invoice date), capital contributions, shareholder current account contributions, loan disbursement, subsidies. Taking into account customer payment terms: a sale made in January and paid in 60 days is recorded in March.
2. List the disbursements. Purchases and sales of goods, salaries and social security contributions, rent, insurance, VAT payable, taxes, loan repayments, shareholder current account repayments, planned investments. All inclusive of VAT, as of the actual payment date.
3. Calculate the balance. For each column: cash inflows minus cash outflows = monthly result; add the previous cumulative total to obtain the rolling total. This is the important point: this reserve must remain positive or at least be covered by financing.
4. Analyze the cash flow discrepancies. Identify the gaps: quarterly VAT payments, annual bonuses, sales seasonality. These cash flow discrepancies, which must be taken into account from the outset, are what create difficulties, not the average level of activity.
5. Update regularly. Replace the forecast with the actual figures, analyze the discrepancies, and adjust accordingly. A living cash flow forecast is worth a hundred times more than a static document in the initial business plan.
Cash flow forecast template (Excel format)
| Line | Jan. | Feb. | Mars |
|---|---|---|---|
| Cash receipts : sales including VAT, capital, loan, subsidy | 18 000 | 15 500 | 21 000 |
| Disbursements purchases, salaries, expenses, VAT, rent, reimbursement | 16 200 | 17 800 | 18 300 |
| Monthly result | +1 800 | -2,300 | +2 700 |
| Cumulative amount available | 4 800 | 2 500 | 5 200 |
Create this structure in Excel with a monthly column for the year: that's enough to get started. Add a row for each expense category for more detail, and a "pessimistic" version (sales -20%) to test the project's viability. A good rule of thumb: never have less than a full cycle's worth of expenses in advance in your bank accounts.
Excel or other software: how to choose the right tools?
Excel is perfect for creating an initial cash flow plan: free, flexible, and widely used. Its limitations become apparent with practice: manual data entry, formula errors, and no integration with bank or invoicing systems. Once the plan is created, a connected tool saves valuable time and improves the reliability of the forecast.
Djaboo It naturally feeds into your cash flow plan: invoices issued and their due dates provide future cash inflows, payment tracking updates the actual balance, and automated reminders reduce customer delays—the primary cause of negative balances. Combined with a spreadsheet or dedicated cash management software, the entire cash flow becomes transparent, and the method for calculating each forecast is reliable.
The cash flow plan in the life of the company
At each stage of a company's development, the cash flow forecast changes its role. At the company's inception, it validates the initial funding amount: what financing needs must the company cover to reach profitability? During growth, it manages the financing needs of the cycle: the more the company sells, the more money it advances before receiving payment. In times of difficulty, it becomes the tool for financial survival: every week counts, every expense is carefully considered.
The cash flow forecast is also the common language a company uses with its financial partners. Bankers want to see a realistic financial projection before financing an investment; accountants rely on it to advise managers on financial management; and potential buyers require it to assess the company's true financial health. Knowing how to create a proper cash flow forecast is therefore a fundamental financial skill for any entrepreneur, just like reading an income statement or calculating a profit margin.
A good organizational practice: link the cash flow forecast to the company's daily operations. Each invoice issued contributes to the projected cash inflows, each supplier order contributes to the cash outflows, and the collected VAT is provisioned separately. By doing so, the projected cash flow statement updates itself almost automatically, reflecting actual results, and the company maintains a financial outlook for six months to a year at all times.
Adapt the plan to each situation
Seasonal business Detail the high season week by week, and plan the financing for the low season (inventory, fixed costs). A typical example: a business that generates 40% of its annual revenue in December must build up its cash reserves in advance and factor in January's tax and VAT.
Service activity with long payment terms Add a "customer delays" line item of 10 to 20% of receipts to be realistic. Use advance billing to improve cash flow, and reserve short-term credit for periods when a large payment slips from one period to another.
Creation with heavy investment Separate the investment plan (machinery, capital-financed works, and bank loans) from the operating cycle. A common mistake is to finance a long-term asset with current cash flow: the surest way to end up with a negative balance in the first year. The cash flow forecast must show the two flows distinctly, with a numerical example for each pessimistic, realistic, and optimistic revenue scenario to inform each decision and verify that the product reaches its market within an appropriate timeframe.
Common mistakes to avoid
Thinking in terms of pre-tax (HT) prices instead of post-tax (TTC) prices (VAT is processed through cash flow!); confusing invoice date with payment date; forgetting the manager's social security contributions, income tax, or the business property tax (CFE); forgetting to take into account planned investments and their financing; creating the spreadsheet once and never updating it. Another common mistake among entrepreneurs at the start: overestimating revenue for the first few months on the market. It's better to use conservative assumptions that allow the company a margin, and to build up reserves as soon as the product sells well.
From cash flow planning to complete management
A cash flow forecast doesn't exist in isolation; it's integrated with the rest of the management process. The projected income statement provides revenue assumptions; the projected cash flow forecast translates these into dated cash flows; and accounting records verify the actual results. Together, these three tools cover the management needs of any business, and the initial business plan remains a working document instead of gathering dust in a drawer.
A few final tips. Regarding cash inflows and outflows, record each amount on its due date and remember to factor in seasonal variations throughout the year: social security contributions, property tax, and year-end bonuses. On the customer side, monitor actual payment terms and revenue collected rather than invoiced; the money in the bank is the only forecast that truly matters to the business. On the supplier side, request a payment plan before any difficulties arise, never during them. And if the balance remains positive for several consecutive years, consider building up a reserve and then investing the surplus: money sitting idle in bank accounts is an opportunity expense, a classic example of overlooked optimization.
Finally, here's an example of an organization that works: fifteen minutes a week to use the forecast spreadsheet (updating income and expenses, checking available funds), thirty minutes a quarter with the accountant to validate the forecast and VAT expense, and an annual review for the important items: investments, financing, and strategic purchases and sales. Managing at this pace allows for true cash flow control, stress-free payment of every short-term obligation, and alignment of cash flow with the strategy. Cash flow needs become predictable, and overall management becomes second nature.
F.A.Q
What is the difference between a cash flow plan and a financing plan?
The financing plan compares needs and sustainable resources at the start and over three years; the projected cash flow plan tracks the money month by month. The former verifies the financial balance of the future project, the latter the balance of the bank account at each point in time.
What is the timeframe for establishing a cash flow plan?
Twelve rolling months is the norm; six months is enough for a small stable activity; 18 to 24 months for a business creation or fundraising, in order to cover the whole cycle and help the decision of the financiers.
How do I calculate the cash balance?
Monthly balance = receipts (including VAT) − disbursements (including VAT); cumulative balance = monthly result + previous cumulative balance. This reserve must correspond to the actual available funds in the bank accounts; this is the point to verify each month.
What should I do if my plan shows a negative period?
Anticipate: utilize a short-term overdraft facility, postpone an expense, expedite a cash flow, negotiate supplier payment terms or a current account contribution. The cash flow plan serves precisely this purpose: to transform a future difficulty into a simple management adjustment.
To put this into practice: Power your plan with the Djaboo cash flow module.
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This plan should be read in conjunction with the heritage projection, presented in the article on the projected balance sheet.
