How to Create and Follow a Cash Forecasting Model

To help you understand how to create and follow a cash forecasting model, let us paint a picture for you. 

The Hero

Every hero has a story. And we are big fans of the hero. You are the hero in this story. 

Picture yourself as Luke Skywalker. 

You are the entrepreneur working really hard and doing amazing things. You have guts, passion, and are willing to put it all on the line. We understand where you are coming from and have tremendous respect for you. 

But we also understand that it’s not easy. 

The Problem

In every story, the hero has a problem to solve. Some are more challenging than others, there is a problem we see over and over again. 


  • Don’t have the financial visibility to know when cash needs will arise
  • Don’t know how to be proactive to avoid these needs 
  • Don’t have the time to pull the information together
  • Don’t have the unique abilities to work through the issues

This is your Darth Vader and it can have massive implications on your ability to build and grow your business. Nobody wants to run out of cash.

The Guide

Another essential aspect of a good story is a guide.

New Economy, with its team of experts, financial tools, and trusted processes, is grateful to play the role of the guide. 

We want to help you solve the problem. We want to help you succeed. We are your Yoda.

In this article, we’ll take the opportunity to explain how we can help you solve this common problem i.e. get rid of your Darth Vader. Specifically, we’ll talk about the importance of visibility around cash flow and the projection tool we use to help our heroes become triumphant. 

The Cash Forecasting Model aka The Tool

Here at New Economy, we believe that entrepreneurs need a tool to see their cash flows out into the future. We like to provide this visibility over a rolling 13-week period. 

Our tool is very easy to use and is accessible by way of Google Sheets. 

It’s our goal to start simple and solve the problem at hand (lack of data for visibility and decision-making), only then will we introduce automated technology and dig deeper into your finances.

You can check out our free cash flow tool here

Getting Started with Your Cash Forecasting Model

Before diving head-first into your cash forecasting model, you need to do some planning, investigating, and info-gathering.

This can be a time-consuming process, so be patient and give it the time it needs, ensuring your records are thorough and complete. Keep in mind, hard work now has the possibility to make massive impacts on your business and help you sleep better at night :). 

Here are some simple steps you can take to get started:

  1. Analyze historical spending
  2. Understand spending needs
  3. Cut, reduce, and extend payments
  4. Identify cash flow gaps
  5. Identify solutions to cash flow gaps

As you gather this information, you’ll need to get deep into the “weeds”. Look at your accounts receivable and accounts payable journal and take a close look at historical bank statements since we are talking about cash. These are the source documents that will be utilized to build out the tool. 

We always advise clients to be detail-oriented because the more information you include in the tool, the better your results will be. 

The above data will be utilized to show the cash in and cash out needs of the business. We will be leveraging the historical results to predict the next 13 weeks. 

A great start is to sign up for that cash flow tool noted above which will walk you step by step through the process of building out the tool.

Your Transformation

Nailing down a cash forecasting model comes with plenty of benefits. You’ll gain stronger business processes and intelligence around:

  • Cash collection acceleration techniques
  • Proven effective collection policies
  • Proven effective credit policies
  • Proven effective payment policies
  • Building cash reserves
  • Preparedness on meeting obligations before they occur

Remember when we said a well-built cash forecasting model will greatly impact your business and help you sleep at night? 

We meant it. 

Ending with Success

What does success look like in your story? If gaining financial security establishes itself as a success indicator for your business, our team at New Economy has you covered. 

With our help, we’ll work to help you get the feeling of financial security based on the ability to predict cash flow needs. 

You’ll be able to: 

  • Know when, where, and how your cash flow needs will occur
  • Know the best resources for meeting cash flow needs (Debt, Equity, Factoring)
  • Prepare to meet those needs in advance
  • Set goals for building cash reserves
  • Set goals for paying down debt
  • Improve collection processes and techniques

Your success is important to us and as a recession looms, cash forecasting models need to play an even larger role in your financial management processes as they can prepare your business for what’s to come. 

If you want to learn more, schedule a time to meet with Jeff, the Founder of New Economy! We help entrepreneurs gain control of their finances to make smart decisions to build and grow their businesses.

We’d love to be a part of your story.