Budgeting & Cash-Flow Forecasting · United KingdomVAT, payroll and Corporation Tax all fall due on dates you can see coming. We build the budget and cash-flow forecast that plan for them.
We prepare an annual budget, report budget-versus-actual each month alongside your management accounts, and keep a rolling cash-flow forecast current, so you can see what is due to come in, what has to go out and when.
At a glance
- Our fee
- Quoted on scope
- Authorities
- HM Revenue & Customs (HMRC)
- Forms & references
- VAT Return (MTD)CT600Self Assessment (SA100)
- You receive
- Annual budget, monthly budget-versus-actual report and rolling cash-flow forecast
- Forecast horizon
- Commonly 13 weeks by week, plus 12 months by month
- Cadence
- Updated monthly, once the books are reconciled
- Built on
- Reconciled bookkeeping and management accounts
Overview
What it is, and why it matters.
A budget is your plan for the year: the sales you expect, the costs you intend to carry and the profit that should be left. A cash-flow forecast answers a different question. It shows how much money will be in the bank week by week and month by month, once customers have paid and bills have gone out.
The two differ because profit and cash move at different times. A sale on credit usually counts as income when it is invoiced, but reaches the bank only when the customer pays. The VAT you charge is held until the return is paid, usually one calendar month and 7 days after the VAT period ends, and Corporation Tax is usually payable 9 months and 1 day after the accounting period ends.
We build both on reconciled books. Each month we set actual results against the budget, explain the larger differences and roll the forecast forward, commonly as a 13-week view for the near term and a 12-month view beyond it. Known outflows go in on their due dates: VAT, PAYE and National Insurance, Corporation Tax, Self Assessment payments on account, dividends, directors’ pay and loan repayments.
You receive the figures alongside your management accounts and go through them with us in a monthly review. Where a decision needs it, we add simple financial analysis: margins, working capital, break-even and how long current cash would last at the present rate of spending.
Who needs it
Who typically needs it.
- 01
Owner-managed limited companies
Directors who want to set salary, dividends and tax payments against the cash the company is expected to have, not the balance on the day.
- 02
Sole traders with uneven income
Self-employed people whose income varies through the year and who need to set money aside for the 31 January and 31 July Self Assessment payments.
- 03
VAT-registered businesses with seasonal sales
Businesses whose VAT payment follows a busy quarter and falls due in a quiet one, when less cash is coming in.
- 04
Businesses about to take on fixed costs
Owners planning to hire, sign a lease or buy equipment who want to see the effect on cash before they commit.
- 05
Businesses with borrowing
Companies with loan repayments to plan around, or a bank or investor that asks for a cash-flow forecast and regular management accounts.
- 06
Small groups of companies
Owners of two or three related companies who need one view of cash across them, including balances the companies owe each other.
When you need it
The moments that usually trigger it.
- A VAT or Corporation Tax payment has left you short of cash more than once.
- Your accounts show a profit but the bank balance keeps falling.
- You’re about to hire, sign a lease or take on a loan and want to see the effect on cash first.
- A bank, lender or investor has asked for a budget or a cash-flow forecast.
- You want to set directors’ pay and dividends for the year and know the company can afford them.
- Your sales are seasonal and the quiet months are hard to fund.
- You receive management accounts each month but have no budget to compare them with.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
An annual budget set out by month, built from your past results and your plans for sales, prices, staffing and costs.
- 02
Monthly budget-versus-actual reporting alongside your management accounts, with the larger variances explained.
- 03
A rolling 13-week cash-flow forecast of expected receipts and payments, week by week.
- 04
A 12-month cash-flow forecast tied to the budget, showing the expected bank balance at each month end.
- 05
Tax and other known payments placed on their due dates: VAT, PAYE and National Insurance, Corporation Tax, Self Assessment payments on account and loan repayments.
- 06
Directors’ pay and dividends planned against forecast cash and distributable profit.
- 07
Simple financial analysis: gross and net margins, working capital, debtor and creditor days, break-even and cash runway.
- 08
A monthly financial review with you, covering what changed, which assumptions need updating and what decisions are coming up.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationCheck the books
We confirm that the bank, VAT, payroll and loan accounts are reconciled and that debtors and creditors are current. If they aren’t, we tell you what catch-up work is needed first.
Agree the assumptions
You tell us your plans for sales, prices, staff and spending. We write each assumption down in plain words so it can be checked and changed later.
Build the budget and forecast
We prepare the annual budget by month and the cash-flow forecast, with tax, payroll and loan payments placed on the dates they fall due, and go through the first version with you.
Update each month
Once the month is reconciled, we add the actual results, report budget-versus-actual and roll the forecast forward.
Review with you
We go through the figures together: what differed from plan, why, and what it means for cash over the coming weeks and months.
Re-forecast when plans change
A new contract, a lost customer or a planned hire goes into the forecast when you tell us. The budget stays fixed so results can still be measured against it.
Fees
What it costs.
Our professional fee for this work. Government and third-party charges are separate, and you have your total in writing before we start.
Finance and reporting
| Service | Fee |
|---|---|
| Budget and cash-flow forecast | Quoted on scope |
Statutory accounts for a small company are priced with its Corporation Tax return, under Tax returns and company accounts.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Books and records
- Adviser access to Xero, QuickBooks, FreeAgent or Sage, or a trial balance with aged debtor and creditor reports
- Bank feeds or statements for every business account
- Last filed accounts, and recent management accounts if you have them
Tax and payroll
- VAT scheme and return periods, and your latest VAT return
- Payroll reports showing PAYE and National Insurance, if you run payroll
- Latest Corporation Tax computation, or Self Assessment calculation with any payments on account
- Details of any Time to Pay arrangement with HMRC
Commitments
- Loan, finance and lease agreements with their repayment schedules
- Rent, insurance and other costs paid quarterly or annually
- Planned directors’ pay and dividends
Plans and assumptions
- Expected sales by month, including large contracts and any seasonal pattern
- Planned hires, pay changes and equipment purchases
- Usual payment terms with customers and suppliers
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Treating profit as cash
A profitable month can still end with less money in the bank: customers pay later, stock is bought ahead, and the capital part of a loan repayment never appears in the profit and loss account. Spending decisions made on profit alone can leave the business short for a bill it could have seen coming.
- Mistake 02
Spending the VAT you have collected
VAT charged to customers is held for HMRC until the return is paid, usually one calendar month and 7 days after the VAT period ends. Treating it as working capital is a common reason for a missed VAT payment, which can bring interest and late payment penalties.
- Mistake 03
Leaving Corporation Tax out of the forecast
Corporation Tax is usually payable 9 months and 1 day after the accounting period ends, long after the profit was earned. A forecast that leaves the estimated bill out shows more spare cash than the company really has, often just when dividends are being decided.
- Mistake 04
Setting a budget and never comparing it
A budget is only useful when actual results are set beside it each month. Without budget-versus-actual reporting, overspending or a falling margin tends to surface at the year end, when it is too late to act on.
- Mistake 05
Forecasting from unreconciled books
If the opening bank balance, the debtors or the VAT liability are wrong, every week that follows is wrong too. The forecast still looks precise, which makes it more misleading than having none.
Worth knowing
The limits, stated upfront.
This is a defined service: a budget, monthly budget-versus-actual reporting, a rolling cash-flow forecast and a monthly review. It is not finance director or financial controller work, and decisions about the business remain yours.
Budgets and forecasts are estimates built on your assumptions, not guarantees of future results. We don’t audit them or issue an assurance report on them.
We don’t give regulated investment or lending advice. Whether a bank, lender or investor relies on a forecast is their decision.
The work depends on reconciled books. If the bookkeeping is behind, catch-up work comes first and is scoped separately.
Preparing and filing tax returns is covered by our Tax Filing service, and running payroll is a separate piece of work. Until those figures are final, the forecast uses estimates of the tax and payroll costs due.
Tax payment dates and rules are set by HMRC and can change; we confirm what applies to your business when we scope your work.
Questions
Budgeting & Cash-Flow Forecasting: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionWhat is the difference between a budget and a cash-flow forecast?
A budget is a plan for income, costs and profit over the year, and a cash-flow forecast is a prediction of the money in the bank as receipts and payments actually happen. The budget is normally fixed once agreed and used as a yardstick. The forecast is updated as the year goes on.
What is a 13-week cash-flow forecast?
It is a week-by-week projection of money coming in and going out over roughly the next quarter. Thirteen weeks is short enough that most receipts and payments can be estimated from invoices and bills already in the books, and long enough that it normally takes in a quarterly VAT payment and several payroll runs. We pair it with a 12-month view for longer-term planning.
How do management accounts relate to a cash-flow forecast?
Management accounts report what has already happened, and the forecast starts from where they finish. Each month’s closing bank balance, debtors, creditors and tax liabilities become the forecast’s opening position, and the profit and loss account supplies the actual figures for the budget-versus-actual report. That is why the forecast is updated monthly, once the month’s books are reconciled.
Do my books need to be up to date before you can forecast?
Yes. A forecast starts from today’s bank balance, what customers owe you, what you owe suppliers and what you owe HMRC, so those figures have to be right. If the books are behind, catch-up bookkeeping is scoped separately and forecasting starts once it is done.
How does a cash-flow forecast plan for VAT and Corporation Tax bills?
Each tax goes into the forecast on the date it falls due, with the amount estimated from your books. VAT is shown as a payment usually one calendar month and 7 days after each VAT period ends, and Corporation Tax usually 9 months and 1 day after the accounting period ends. For sole traders, Self Assessment payments on account go in on 31 January and 31 July. The estimates are replaced with actual figures once each return is prepared.
Will a bank or lender accept the forecast?
It may, but that is the lender’s decision and we can’t promise it. Lenders often ask for a cash-flow forecast and recent management accounts, and each sets its own format and level of detail. We prepare the forecast and set out the assumptions behind it, but we don’t give lending advice or an assurance report on the figures.
How is this different from a finance director service?
It is narrower. We prepare the budget, the forecast and the monthly reports and go through them with you, but we don’t join your management team, negotiate with lenders or take decisions for the business. If you need that level of involvement, a part-time or full-time finance director is the better fit.
Related
Often needed alongside this.
Speak with a consultant
Talk to us about budgeting & Cash-Flow Forecasting.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com
