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Cash flow forecasting – one size does not fit all

As we entered lockdown, I challenged myself and my business partner, Myles, to create a one-size-fits-almost-all cash flow template.

I wanted to build a tool that could help businesses get to grips with their historic Xero data and their forecasting in one go. I wanted it to be simple enough for anyone to pick up and use instantly. But at the same time, I wanted it to be powerful and flexible enough to answer almost any forecasting question a user may have during these unusual times.

Why days of diligence led to defeat

We battled with the scoping of this all-powerful tool for days. In the end, we had to admit defeat. There are just too many variables and too many layers of potential detail to meet everyone’s needs. Especially when ‘everyone’ includes:

  • a small-business owner who has never used even a simple, single-view forecast cash flow tool before
  • a small accounting firm looking for something quick, reliable and professional to support multiple clients
  • a larger corporate finance team looking for comprehensive sensitivity, scenario or simulation modelling

We concluded that attempting to shoehorn everybody’s requirements into one model would leave us with something enormous, confusing and far from fit for purpose.

One for one, not one for all

So we turned back to our three most frequently used Microsoft Excel cash flow templates with a new-found sense of respect and love. Let me introduce:

  • The Simple One: a straightforward weekly model, with input rows for hardcoding weekly cash inflows and outflows. It includes some useful and effective graphs. You can download our simple free cashflow model for FREE here.
  • The Moderate One: a rolling 13-week forecast which pulls transaction-level data from your balance sheet in Xero at the click of a button. (This works best with a DataDear licence). It also includes some simple forecasting inputs to use alongside the unwinding of your balances. Until the end of June, you can download this template FREE here.
  • The Comprehensive One: a multi-year, three-statement, actuals-plus-forecast model with the ability to roll forward actuals by month. We carefully tailor this model around each client’s needs. For a quote, please get in touch:

Which version is best for you?

With my financial-modelling and spreadsheet-geek hats on, I’d love it if every business owner jumped in at the deep end, learnt how to build a complex three-statement model – or worked with us to create one for them. (If that’s you, great, let’s have a chat!)

However, with a finance director’s hat on I’ve a different view. Some business owners and smaller finance teams simply do not yet have the modelling experience, comfort with Excel, and/or time for a bespoke comprehensive model to make sense as a first step.

For these individuals and teams, the priority should be to use a model that doesn’t become a part of the challenge itself.

Let’s check if that’s you…

Would the thought of using a SUMIFS formulae keeps you up at night? Yes? Do you currently use a financial model that provides a single prediction of the future of your business, and that you feel comfortable with? No? Then consider starting with a simple 13-week set of hardcoded forecast figures – The Simple One, from our list above.

Just get that first simple forecast built and working for you, and then think about your next move. (And there should be a next move… don’t get too comfortable with a manual, hardcoded forecast as ultimately it will become a bottle neck for your time when you start thinking about sensitivities and scenarios).

This is how we work with many of our clients who engage us as part-time finance directors. Our first step is to provide our client with much visibility of their current situation as possible. We then add layers of information and analysis (sensitivities and scenarios are a logical next step).

Gain clarity around your cash flow

Many people love the old saying ‘Cash is king’, but at Clarity we prefer ‘Cash flow is king’. If you’re a business owner battling to succeed, gaining clarity around your cash flow – and a clearer view of your financial future – will serve you well in the weeks, months and years ahead.

In addition to the free templates I’ve mentioned here, our Eloquens page features a range of other financial tools you may also find useful. Try our templates – and feel free to call or email for further help and advice.

Call +44 1225 350730

Email us


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Call +44 1225 350730

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