cash-flow-forecast

Cash Flow Forecast

Overview

Project future cash inflows and outflows using a 3-month moving average methodology. Identifies recurring revenue and expenses, detects seasonal patterns, and produces a monthly projection table.

Wilson Tools Used

• spending_summary — get monthly expense totals and category breakdowns for trend analysis
• anomaly_detect — identify recurring transactions (subscriptions, regular payments, payroll) that form the predictable baseline
• transaction_search — pull historical cash position and transaction data

Workflow

1. Ask for the forecast horizon (default: 3 months) and current cash balance.
2. Use transaction_search to pull the last 6-12 months of transactions.
3. Use spending_summary for each of the past 6 months to get income and expense totals.
4. Use anomaly_detect to identify recurring transactions (subscriptions, payroll, rent, retainers).
5. Calculate the 3-month moving average for income and expenses:
   • Moving Avg Income = (Month-1 + Month-2 + Month-3) / 3
   • Moving Avg Expenses = (Month-1 + Month-2 + Month-3) / 3
6. Separate recurring (predictable) from variable (estimated) cash flows.
7. Generate the projection:

CASH FLOW FORECAST — [Start Month] to [End Month]
══════════════════════════════════════════════════════════
                      Month 1     Month 2     Month 3
──────────────────────────────────────────────────────────
Opening Balance       $XX,XXX     $XX,XXX     $XX,XXX

INFLOWS
  Recurring Revenue    $X,XXX      $X,XXX      $X,XXX
  Variable Revenue     $X,XXX      $X,XXX      $X,XXX
  Total Inflows        $X,XXX      $X,XXX      $X,XXX

OUTFLOWS
  Payroll             ($X,XXX)    ($X,XXX)    ($X,XXX)
  Rent                ($X,XXX)    ($X,XXX)    ($X,XXX)
  Subscriptions         ($XXX)      ($XXX)      ($XXX)
  Variable Expenses   ($X,XXX)    ($X,XXX)    ($X,XXX)
  Total Outflows      ($X,XXX)    ($X,XXX)    ($X,XXX)

NET CASH FLOW          $X,XXX      $X,XXX      $X,XXX
Closing Balance       $XX,XXX     $XX,XXX     $XX,XXX
══════════════════════════════════════════════════════════

8. Flag any month where projected closing balance drops below a safety threshold (suggest 2 months of expenses as minimum).

Without Wilson

1. Export the last 12 months of transactions from your bank as CSV.
2. In Google Sheets, add a Month column: =TEXT(Date,"YYYY-MM").
3. Create two pivot tables: one for income by month, one for expenses by month.
4. For the 3-month moving average, use: =AVERAGE(B2:B4) sliding across the monthly totals.
5. For recurring items, sort by description and look for entries that repeat monthly. Sum these separately.
6. Build the projection manually: Opening Balance + Avg Income - Avg Expenses = Closing Balance. Closing Balance of Month N = Opening Balance of Month N+1.
7. For a more accurate forecast, use Excel's =FORECAST.ETS() function on monthly totals, which handles seasonality automatically.
8. Google Sheets alternative: =FORECAST(target_date, known_values, known_dates).

Important Notes

• The 3-month moving average smooths volatility but lags behind trend changes. If your business is growing or shrinking rapidly, weight recent months more heavily.
• Forecasts are estimates. Build in a 10-20% buffer on expenses for unexpected costs.
• Seasonal businesses should use 12-month data minimum to capture full cycles. A 3-month average in retail would badly miss holiday spikes.
• This is cash-basis forecasting. Outstanding invoices and unpaid bills are not reflected until money moves.