Start with available cash, place expected receipts and payments on their likely dates, and check the lowest running balance. A positive week-end total can still hide a shortage earlier in the week.
Profit does not tell you Monday's bank balance
A sale may be profitable but still unpaid. Material, wages or rent may be due before that receipt arrives. A short cash plan follows when money is expected to move, rather than when sales were recorded.
The FDIC's cash-flow training and the SBA's business-management guidance discuss cash-flow planning. The worksheet here is our illustrative operating example for an Indian business; it is not a borrowing recommendation or a statement of Indian tax rules.
List commitments, then test the timing
Assume available opening cash is ₹1,20,000. A buyer has promised ₹80,000 on Tuesday. Materials of ₹90,000 are due Monday, wages of ₹60,000 on Wednesday and rent of ₹20,000 on Friday. These amounts are fictional.
| Day | Cash in | Cash out | Expected closing cash |
|---|---|---|---|
| Opening | — | — | ₹1,20,000 |
| Monday | ₹0 | ₹90,000 | ₹30,000 |
| Tuesday | ₹80,000 | ₹0 | ₹1,10,000 |
| Wednesday | ₹0 | ₹60,000 | ₹50,000 |
| Friday | ₹0 | ₹20,000 | ₹30,000 |
The expected closing balance is ₹1,20,000 + ₹80,000 − ₹1,70,000 = ₹30,000. That result depends on the receipt arriving when expected.
Move the receipt to Friday
If the buyer pays on Friday instead, Wednesday's projected balance is ₹30,000 − ₹60,000 = minus ₹30,000. The weekly total has not changed, but the timing has exposed a ₹30,000 gap before the receipt. On Friday, check whether the receipt clears before rent is paid; the day-end figure alone cannot show that sequence.
A negative forecast is an exception to resolve, not permission to spend money that is unavailable. Confirm the buyer's date, review movable purchases with the relevant supplier, and consider available options with the person responsible for your finances. Keep wages and other commitments visible; do not simply delete inconvenient payments from the sheet.
Label confidence in each receipt
- Received: verify it against the bank or cash record.
- Promised: retain the amount, expected date and who confirmed it.
- Unconfirmed: show separately from the base plan.
Do not count a payment twice because it appears in both a collection message and a bank entry. Separate restricted or unavailable balances from money you can actually use. If facilities, taxes or repayments are relevant, include them with their own evidence and dates.
Keep the forecast useful
Update actual receipts and payments each day. Carry forward unpaid commitments, then compare last week's forecast with what happened. Repeatedly late customers may need different expected dates next time.
A useful phone question is: “Agar Tuesday ka payment Friday ko aaya, Wednesday ko kitna short hoga?” The assistant needs dated cash commitments to answer it; an outstanding balance alone cannot provide a cash forecast.
Questions you might ask
Can a profitable business run short of cash?
Yes. Customers may pay after materials, wages or other commitments are due. Check dated receipts and payments rather than profit alone.
Why check daily balances if the week ends positive?
The week can end positive but turn negative earlier. Moving an expected receipt to a later date reveals that timing gap.