Running out of cash is the number one reason Kenyan businesses fail — not lack of profitability. A cash flow forecast is a simple tool that maps your expected cash receipts and payments month by month, revealing potential shortfalls weeks before they arrive.
The Three-Step Process
Step 1 — List expected cash inflows: Sales receipts (not invoiced amounts — actual expected payment dates), loan proceeds, rent received, and any other cash income. Be conservative. If a client typically pays 45 days late, model that — not the invoice date.
Step 2 — List expected cash outflows: Salaries and wages (PAYE, NSSF, SHA), rent, supplier payments, loan repayments, tax remittances (VAT by 20th, PAYE by 9th), and capital expenditure.
Step 3 — Calculate net cash position: Open balance + inflows − outflows = closing balance. A negative closing balance is a warning — act before the month arrives.
Tools and Templates
- Microsoft Excel / Google Sheets — free and flexible
- QuickBooks Cash Flow Planner — syncs with your books
- Sage Business Cloud — built-in forecasting for growing businesses
Action Triggers
Build in decision rules: if forecast cash drops below one month's operating expenses, trigger a review — accelerate collections, defer non-critical payments, or draw on your overdraft before you hit zero. Review the forecast monthly and update with actual figures.
Avatechtax includes cash flow forecasting in our Business and Corporate bookkeeping packages. See what's included.
