Why every SME should have a 90-day cash flow forecast

For many UK SMEs, uncertainty has become part of doing business.

Rising employment costs, pressure on margins and wider economic uncertainty are making it increasingly difficult for business owners to plan confidently for what comes next.

The Azets Barometer reflects this mixed picture, with 46% of SMEs feeling pessimistic and 43% optimistic. While opinions differ on what the next 12 months may bring, the split itself highlights a common challenge. Many business owners are finding it harder to plan with confidence because economic conditions remain difficult to predict.

According to Donald Boyd , UK Head of Growth at Azets, who has advised SMEs for more than 30 years, uncertainty does not necessarily mean businesses should stand still. Instead, having greater visibility over your financial position can give you the confidence to make informed decisions and respond quickly when circumstances change.

One of the most practical places to start is a cash flow forecast.

Why cash visibility matters

It can be tempting to use the amount of cash in the bank as an indication of how well a business is performing. But your bank balance only tells you where you are today, not what could happen in the weeks ahead.

Payroll, supplier payments, tax liabilities and other working capital costs can quickly change the picture. Timely financial information can therefore help you understand not just where your business is now, but where it could be heading.

Why focus on the next 90 days?

Long-term forecasts have an important role in business planning, but when conditions are changing quickly, looking at the immediate future can be particularly valuable.

Donald recommends SMEs maintain a simple rolling 90-day cash flow forecast – sometimes known as a 13-week cash flow forecast – looking at the cash expected to come into and leave the business over the coming months.

At its simplest, this means considering:

What cash do you have available now?
What income are you expecting and when will it arrive?
What payments need to be made and when?
Where are the potential pressure points?
Is there enough headroom if income falls or costs increase unexpectedly?

The aim isn't to predict the future perfectly. It is to identify potential issues early enough to act.

Turning foresight into action

If a forecast highlights a potential cash shortfall, acting early can give you more options. This could mean reviewing costs or pricing, improving debtor collection, reconsidering investment plans or exploring additional funding.

Equally, a healthy forecast could give you greater confidence to invest, recruit or pursue growth opportunities that might otherwise be delayed because of uncertainty.

Forecasting therefore isn't just for businesses experiencing difficulties. Understanding your cash position can support better decisions at every stage.

SMEs have resilience on their side

One of the strengths of SMEs is their ability to respond quickly to change. Business owners are often close to their customers, employees and finances, enabling them to adapt faster than larger organisations.

But that agility relies on having the right information. Greater financial visibility can help you spot changes earlier, understand your options and act while you still have time to do so.

Don't wait until you are running out of runway

Getting advice early can also make a significant difference. The sooner a potential issue is identified, the more opportunity there is to consider the options available.

An adviser can provide an external perspective, helping you understand what the numbers mean for your business and what steps you could take next.

Three questions to ask yourself

If you're unsure how financially resilient your business is, start with three simple questions:

Do I know what my cash position is likely to look like in 90 days?
Do I understand the biggest factors that could change that position?
If the forecast shows a problem, do I know what I would do about it?

If you can't confidently answer all three, now could be a good time to speak to your accountant or business adviser.

As Donald explains, certainty can be incredibly valuable for SMEs. The answer isn't always going to be positive, but knowing where you stand gives you the opportunity to act.

A 90-day cash flow forecast can help you understand whether your business has sufficient financial headroom to absorb unexpected costs, manage periods of slower income and take advantage of new opportunities when they arise.

Listen to the full episode

Listen to the latest episode of Fresh Perspectives to hear Donald discuss the current mood among UK SMEs, the pressures businesses are facing and why a simple 90-day cash flow forecast can make a significant difference.

Listen to the episode