How to plan cash flow for a new financial year

Step 1 — start from last year's actuals

The best foundation for next year's plan is last year's reality. Pull your actual monthly cash movements and use them as a base, adjusting for what you know will change — a new contract, a price rise, a planned investment. This grounds the plan in evidence rather than optimism, and quickly reveals your recurring seasonal pattern. See managing seasonal cash flow.

Step 2 — lay in the known big payments

Mark every large, known outflow on the calendar: VAT quarters, corporation tax, annual insurance and licence renewals, any planned capital spend, and loan repayments. These are predictable months in advance, so a plan that includes them never gets ambushed by them. See planning around VAT and tax.

Step 3 — forecast receipts realistically

Project income month by month using realistic assumptions about sales and your actual debtor days, not best-case hopes. Where income is seasonal, reflect the real shape of your year. The aim is a monthly running cash balance for the year that shows where, if anywhere, it dips — the whole point of planning ahead.

Step 4 — mark the tight months and act early

With the year mapped, the tight months stand out. Now you can act while you have options: build a buffer through the strong months, time discretionary spending away from the troughs, and — critically — arrange any facility you might need well before the dip, when your figures are strong and negotiation is easy. Arranging finance in a good month beats scrambling in a bad one every time.

Step 5 — put headroom in place

Where the plan shows a genuine trough, arrange standby headroom in advance so the quiet months are covered and calm.

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