Coronavirus: financial forecasting and planning

The Furlough scheme has been allowing many businesses to hold their current position, but one of the real challenges will be the impact on cashflow when this financial support ends in October 2020. If your business has relied on this support, it's therefore vital to start planning ahead now.

Good planning and forecasting can help reduce your business risk by assessing what its financial ‘pinch points’ might be in the future. And, as well as helping to keep your business on track, plans and forecasts are essential for banks and potential investors if you’re looking to raise finance

Financial Planning is simply looking at your business for the year ahead and a forecast is an estimate of your future income and expenses, which allows you to run different scenarios to see what the impact on your business might be. Say, for example, your debtors took 60 days, instead of 30, to pay you. Would you have a cash buffer to cope with this?


1. All businesses can forecast – business owners tend to think they must have visibility of future sales income to produce forecasts, but this simply isn’t true. If you know what your costs are and what you need out of the business, you can calculate what minimum sales are needed to cover this. Anything on top is then a bonus.

2. Set goals - decide on your objectives for the year ahead and then consider what cash is required to achieve these. Your objective may be something specific, such as growing your sales back to pre-lockdown levels. Goals may also be non-sales related, such as building cash reserves, or investing in new machinery.

3. Be realistic – avoid predicting future sales with too much growth or expecting debtors to pay more quickly than they actually do. This is especially relevant to early stage start-ups, and companies looking for investment, in terms of their ability to repay debts.

4. Start with ‘easy’ numbers first - once you know your goals, look at your financial reports for the last year and use these as a starting point for the year ahead. Start with the ‘easy’ numbers first, including fixed costs that won’t change and payroll costs based on current staff numbers. Then look at the more complex figures in detail, e.g. the costs of new staff (recruitment costs, salaries, pension costs and IT costs, etc.). Gradually build your forecast until you have a full picture for the year ahead.

5. Irregular costs - don’t forget to factor in irregular costs, such as corporation tax, VAT and self-assessment payments, which can often catch businesses out.

6. Get the basics in place - ideally, you should have a forecast profit and loss account, balance sheet and cash flow so you can see how the profit, assets/debt and cash will look across the coming year.

7. Seek expert support - whilst business owners often prepare spreadsheet cash flow forecasts themselves, producing a three-tier planning and forecasting report, as outlined above, can be really complicated and should be undertaken by your accounts team/accountant.

8. Review your forecasts regularly - once your forecasts are prepared, use them! Compare your monthly/quarterly results against what your forecasts show, and look at the variances and why these are occurring. By reviewing these throughout the year, you can update your forecasts and/or make changes to address any negative trends.

9. Invest in technology - cloud accounting packages, such as Futrli or Float, can produce and update forecasts with real-time financial data, so you can see exactly how your business is performing against the plan.

10. Get free funding – Coaching grants up to £5k are available through Business West to help businesses fund the cost of any coaching/professional advice that will support them through the current pandemic, including financial forecasting/management and recovery planning.*

How we can help


We believe the process of planning and forecasting should be as straightforward as possible, so all we ask for is an hour of your time to run through a basic financial questionnaire. From this, we can prepare a comprehensive set of draft financial plans and forecasts for review, before we agree a final version.

To find out more, please contact Debbie Boulton on 01225 325580, or email

*High Impact Scale up Coaching Grants are available to qualifying South West businesses until April 2021. For further information, please see: