Quick answer
A cash flow forecast for a loan application shows money expected in and out of the business each month, usually for at least twelve months, including the proposed loan and its repayments. Lenders trust forecasts built from actual history, with conservative assumptions, real payment timing, tax and super included, and a clear explanation of any changes such as a new contract or product.
Key points
- Start from actual bank history, not targets.
- Use cash timing, not invoice dates.
- Include GST, PAYG, super and the new loan's repayments.
- State your assumptions plainly.
Checklist
- Opening bank balance
- Monthly receipts by source
- Monthly payments by category
- BAS, PAYG and super timing
- Existing and proposed loan repayments
- Written assumptions
- A downside scenario
A good cash flow forecast does two jobs at once. It tells you whether you really need the loan, how much and for how long, and it tells a lender that you understand your own business. A forecast built on hopeful numbers does neither. This guide shows you how to build one that is useful to you and credible to a lender.
Start with what has actually happened
The most credible forecasts grow out of history. Export twelve months of bank transactions and group them: customer receipts, supplier payments, wages, rent, loan repayments, tax, owner drawings. That gives you a baseline of what a normal month, a busy month and a quiet month really look like. Your forecast should look broadly like that history unless you can explain why it will change.
Set up the structure
A simple monthly layout works best:
| Line | What goes in it |
|---|---|
| Opening balance | Cash at the start of the month |
| Receipts | Customer payments, other income, loan advances |
| Payments | Suppliers, wages, rent, utilities, insurance, loan repayments, tax, super, drawings |
| Net movement | Receipts minus payments |
| Closing balance | Opening balance plus net movement |
The closing balance of one month becomes the opening balance of the next. The business.gov.au cash flow statement guide and its financial templates are good starting points, and the cash flow gap calculator gives a quick six-month view.
Use cash timing, not invoice dates
A sale invoiced in June but paid in August belongs in August. A supplier bill dated March but paid on 60-day terms belongs in May. This is where many forecasts go wrong: they show profit timing rather than cash timing, and the gap the loan is meant to cover disappears on paper.
Do not forget the big obligations
- GST and BAS: monthly or quarterly, in the month you pay.
- PAYG withholding: with each BAS or monthly for larger withholders.
- Super: under Payday Super, from 1 July 2026, close to each payday.
- Income tax and instalments.
- Insurance premiums, registrations and annual subscriptions.
- Existing loan and lease repayments.
The ATO’s BAS pages list lodgement and payment dates.
Add the proposed loan
Show the loan advance as a receipt in the month you expect it, and the repayments in each month they fall. If there are fees deducted, show the net advance. The forecast should show the loan solving the gap and the repayments being comfortably affordable afterwards. Check the repayment comfort with the repayment coverage calculator.
Write down your assumptions
A short list of assumptions turns a spreadsheet into a story a lender can follow: expected growth and why, customer payment days, new contracts and their start dates, price changes, staff additions, seasonal patterns. If a number depends on something uncertain, say so.
Include a downside case
Add a second version where sales are lower or customers pay later. If the business can still make repayments in the downside case, the forecast is far more persuasive. If it cannot, that is valuable information for you before you borrow.
Common forecast mistakes
- Sales growth that jumps sharply with no explanation.
- Customers paying faster than they ever have.
- Missing tax, super or annual costs.
- Owner drawings left out.
- A closing balance that never dips, even in historically quiet months.
- Ignoring the new loan’s repayments.
Startups and new contracts
For startups, there is no history, so assumptions matter even more. Base them on industry experience, quotes, signed agreements and conservative ramp-up times. For a new contract, attach the contract or letter of award and show exactly when invoices will be issued and paid. Our startup business loans review explains what lenders look for.
An illustrative example
A made-up air conditioning installer wins a commercial contract and applies for working capital. Its forecast starts from a year of bank history, adds the contract’s milestone payments on the client’s stated terms, includes extra wages and equipment hire from the start date, and shows BAS and super. The downside case delays the client’s payments by a month. Both versions show the loan repaid within the contract period, and the lender approves quickly because the numbers tell a clear, conservative story.
Keep it alive after the loan
A forecast is not just for the application. Update it monthly with actual figures and roll it forward. You will spot the next gap months ahead, and your lender will be impressed at review time.
Presenting the forecast to a lender
Keep the presentation simple: a one-page monthly summary, a short list of assumptions and, if useful, a second page with the downside case. Lenders do not need dozens of tabs. Label clearly where the loan advance and repayments appear, and highlight the lowest closing balance so the lender can see the gap you are asking them to fund. If figures differ from last year’s results, add a sentence explaining why. A forecast that a lender can understand in two minutes is far more effective than one that needs a meeting to explain.
Ready to put your forecast to work?
If your forecast shows a gap that finance would solve, make one enquiry. There is no credit check when you first enquire, a real person reviews it and your details go to one lending partner rather than a crowd. Mention that you have a forecast prepared in your enquiry; it usually speeds up the conversation considerably.
Frequently asked questions
Do lenders always ask for a cash flow forecast?
Not for every loan. Smaller unsecured loans often rely on bank statements. Forecasts are commonly requested for startups, larger loans, acquisitions, new contracts and businesses whose recent figures do not reflect the future.
How far ahead should a loan forecast go?
Twelve months is common, sometimes longer for larger or longer-term loans. Monthly detail is usual, with weekly detail for the first few months if cash is tight.
Should my accountant prepare the forecast?
Your accountant can help and adds credibility, but you know the business's timing best. The strongest forecasts combine both.
What is the difference between a cash flow forecast and a profit forecast?
A profit forecast shows income and expenses when earned or incurred. A cash flow forecast shows when money actually moves. Lenders care about cash because repayments are made in cash.
Should I include a worst-case scenario?
Yes. A simple downside scenario showing what happens if sales are lower or customers pay later demonstrates that the loan is affordable even if things do not go to plan.
Can I use a template?
Yes. business.gov.au provides cash flow statement guidance and templates, and many accounting systems can produce a starting forecast from your history.
Sources and further reading
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