Cash flow is the lifeblood of any business, but for small businesses in manufacturing, machine shops, retail, and distribution, it’s more like oxygen — without it, everything stops.

Managing cash flow isn't just about making sure there's enough money to cover bills. It's about having the right amount of cash at the right time to keep operations running, seize opportunities, and avoid costly surprises.

One key area where small businesses often struggle — and where I’ve seen the biggest transformation — is cash flow forecasting.

Why Cash Flow Forecasting Matters

Cash flow forecasting goes beyond simply tracking what’s in your bank account today.

It’s about predicting how much cash will come in and go out over a defined period — usually the next 13 weeks (short-term) or up to a year (long-term).

Without a forecast, you're flying blind.

With one, you have a map that shows where cash shortages or surpluses will occur — giving you time to make strategic decisions instead of reacting to emergencies.

How Small Businesses Might Miss the Mark

Most small businesses don’t forecast cash flow at all. If they do, they rely on gut feeling or simple spreadsheets that only show high-level numbers. That’s not enough.

Cash flow forecasting needs to be granular and dynamic:

• Break down cash inflows and outflows by week, not month.
• Separate fixed expenses (like rent and payroll) from variable expenses (like materials and shipping).
• Align forecasts with production schedules and customer payment terms.
• Update the forecast regularly as new information comes in — this isn’t a one-and-done exercise.

The Power of Rolling Forecasts

A rolling cash flow forecast is a game-changer for small businesses. Instead of building a forecast once and letting it collect dust, a rolling forecast updates every week — always looking 13 weeks ahead.

With this method, you're constantly adjusting based on:

• Actual cash movements
• New customer orders
• Delayed payments
• Upcoming capital expenditures

This continuous feedback loop helps you stay ahead of cash crunches and gives you confidence to make decisions — like when to buy inventory, hire staff, or negotiate better payment terms with vendors.

What Happens When You Get It Right

I’ve seen small businesses go from constantly chasing cash to proactively managing their cash flow with just this one tool.

Here’s what changes:

• You spot cash shortages weeks before they hit, not days.
• You make purchasing decisions based on what the business can actually afford, not what’s in the bank today.
• You avoid expensive short-term financing or overdraft fees.
• You sleep better at night knowing you’re in control of your cash.

Cash Flow Forecasting Isn't Optional

In volatile industries like manufacturing, distribution, and retail — where supply chain delays and customer payment terms can stretch cash thin — cash flow forecasting isn't a luxury. It's a survival tool.

If you're only checking your bank balance to gauge your financial health, you're not managing cash flow — you're gambling with your business.

A simple rolling cash flow forecast can give you the visibility and confidence to run your business instead of letting your business run you.

If you'd like to explore how to set up a cash flow forecasting system tailored to your business, let's chat.

Drop me a DM — I'd love to help you take control of your cash flow once and for all.

👉🏻Read more about how to manage cash flow from Houston CPA