We do not know how much cash we will have next week
Salaries, supplier payments and EMIs are approaching, but next week's balance is a guess. Make a short cash view from receipts and committed payments.
What it looks like
- The owner checks the bank several times a day before approving routine purchases.
- Accounts knows invoice totals but cannot say which customers will pay next week.
- A supplier is promised payment without checking salaries and fixed outflows.
- An expected cheque is counted as cash even though it has not cleared.
- The business appears profitable but has too little cash for tomorrow's payments.
Why it happens
Profit and cash are confused. Sales can be booked before customers pay. Stock and supplier advances consume money before the related sale is collected.
Expected receipts have no confidence level. A customer promise, confirmed remittance advice and bank credit are shown as if they were equal.
Payments are listed only when due. Fixed outflows, supplier commitments, taxes, wages and loans are not placed on one dated calendar.
Owner decisions bypass the list. A new advance or equipment purchase happens on a call. Accounts discovers it after the bank transfer.
Several bank accounts are checked separately. The team cannot see the total usable opening position or restricted funds.
The missed cause is timing. A ₹5 lakh receipt on Friday will not cover a ₹4 lakh salary payment due on Wednesday.
What to check first
- Write today's bank and cash opening balance. Use actual bank statements, not ledger balances alone. Mark funds that cannot be used for ordinary payments.
- List the next seven days of outflows. Check the payment register, salary sheet, loan schedule, rent and statutory calendar. Separate fixed dues from optional purchases.
- Check the next seven days of receipts. Open the Tally receivables list and payment-promise register. Include only dates supported by customer communication. Mark uncertain receipts separately.
Do not count unused borrowing limits as cash already in the bank. Note them only as a separate funding option.
How to fix it
- Use a seven-day opening-to-closing table. Start with money available at opening. Add expected cleared receipts on their dates. Subtract planned payments on their dates.
- Grade receipt certainty. Use 'confirmed', 'promised' and 'unconfirmed'. Calculate a cautious view without unconfirmed money.
- Protect essential commitments. Mark wages, statutory obligations, loan dues and critical supply payments. Confirm statutory dates from current official guidance or your CA.
- Make payment choices visible. Mark optional or negotiable payments. The owner should decide changes before a supplier is promised a date.
- Update after each bank movement. Replace expected figures with actual receipts and transfers. Preserve the earlier forecast to learn which assumptions failed.
- Review the shortfall early. If a day goes negative, contact customers about confirmed receipts, negotiate payment timing or discuss financing with the bank before that day arrives.
Start with these columns:
| Day | Opening ₹ | Confirmed receipts ₹ | Planned payments ₹ | Closing ₹ |
|---|---|---|---|---|
| Monday, example | 2,00,000 | 50,000 | 1,20,000 | 1,30,000 |
| Tuesday, example | 1,30,000 | 0 | 90,000 | 40,000 |
Keep a second view for promised but unconfirmed receipts. The cautious view should remain usable if they slip.
A worked example
For example, an engineering workshop opens Monday with ₹2,00,000. It expects ₹1,50,000 from one customer on Thursday. It must pay ₹1,20,000 on Monday, ₹90,000 on Tuesday and ₹80,000 on Wednesday.
Without the Thursday receipt, Tuesday closes at ₹40,000 and Wednesday needs ₹40,000 more than the available balance. A weekly total can hide this midweek gap. The owner can see the shortfall before committing a further payment. The customer receipt remains uncertain until it reaches the bank.
How you know it is fixed
- For four weeks, compare each day's forecast closing balance with its actual usable balance.
- Count surprise payments that were absent from the previous day's list.
- Record every day with a forecast shortfall and whether a decision was made before the due date.
When it is more serious
A repeated negative cash forecast calls for a wider working-capital review. Stock, customer credit, supplier terms and borrowing costs may need attention. Ask a qualified accountant or bank adviser before taking expensive short-term finance. Never delay statutory obligations simply because another supplier is calling more often. Check current requirements with your CA.
This works if someone does it every day. In most businesses, that someone is you.
Questions people ask
How far ahead should a small business forecast cash?
Start with seven days if cash is tight. Add a longer view once the daily figures are reliable.
Should customer promises be included?
Show them in a separate scenario unless receipt is well supported. Do not treat a promise as cleared funds.
Is a profitable business guaranteed to have cash?
No. Money can sit in unpaid invoices, stock and advances while expenses must be paid now.
What if the closing balance becomes negative?
Check the timing and certainty of receipts, review payment priorities and discuss safe funding options before the date arrives.