List predictable cash coming in
Start with the sales you can reasonably expect and note when customers actually pay. Separate confirmed recurring receipts from uncertain opportunities. A strong sales month does not guarantee the same month will have enough cash in the bank.
Write down fixed and variable costs
List recurring payments such as rent, software, insurance, and loan payments. Then estimate costs that move with sales, such as inventory, contractor work, or transaction fees. Add less frequent bills to the month in which you expect to pay them.
Set aside room for surprises
Use a conservative scenario: What if a major customer pays later or an important purchase costs more? Decide what spending could wait and what cash buffer you want to maintain. Do not treat the budget as a promise that revenue will arrive.
Compare budget to actual each month
Put the plan next to actual sales, expenses, and cash balances. Mark the largest differences, note why they happened, and adjust next month’s forecast. This review is often more useful than a complex model nobody maintains.
Try a three-column worksheet
For each category record: planned amount, actual amount, and explanation of the difference. Use the same categories as your bookkeeping summary where possible, and ask your adviser how tax payments or owner activity should be reflected for your situation.
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