"When will we run out of cash?" is the question owners ask when the bank balance looks fine today and still feels unsafe. The answer is rarely a single number. It is a short-range picture of money in, money out, and the lowest point on the way.
This guide is general information for UK small businesses. It is not a forecast of your firm, and it is not regulated advice. Use it to structure the conversation with your accountant.
Cashwatch™ builds a 13-week view, ages debtors, and flags the trough early, with tax timing in the same picture. Ask answers from your documents and books and cites the source. Alfred prepares. You decide.
Why "cash in the bank today" is not enough
A healthy balance can hide a trough three weeks out: a VAT bill, payroll, a supplier on shorter terms, or invoices that look collectable but are already 60 days late. Runway (cash divided by monthly burn) is a useful sense-check. It still misses timing. Two firms with the same runway can have very different weeks ahead.
A better question: where is the trough?
Map the next thirteen weeks. For each week, list expected receipts and payments. Include tax, rent, wages, loan repayments and the large invoices you hope will land. The lowest closing balance is the trough. That is the number to manage, not today's balance alone.
Read the fuller method in 13-week cash flow forecasting explained, or use the printable 13-week template.
What usually causes the surprise
- Late payers: revenue is booked, cash is not. See how to chase unpaid invoices.
- Tax timing: VAT, PAYE and corporation tax land on fixed dates whether receipts are early or late.
- Lumpy costs: stock, kit, insurance renewals and director drawings that do not show in a smooth monthly average.
- Optimism bias: forecasting every invoice at 100% collectable in week one.
A calm way to answer the question this week
- Export your bank balances and open invoices today.
- List the next thirteen weeks of known payments (payroll, rent, tax, loan).
- Slot expected receipts by week, with a cautious view of anything already overdue.
- Mark the lowest week. That is your trough.
- Decide one action: chase, delay a non-critical cost, or speak to your accountant about timing.
What "running out" really means
Some firms hit zero. More often they hit a comfort line: the balance where wages, tax and key suppliers feel unsafe. Set that line deliberately with your accountant. Then watch the trough against it every week, not once a quarter.
What to read next
- 13-week cash flow forecasting explained
- Cash flow forecast template UK
- Cash flow forecasting that includes tax
- How to chase unpaid invoices
- How to reduce debtor days
- Cashwatch™
- Ask
- Glossary
This page is general information. It does not forecast your business. Nothing here is regulated advice. Speak to a qualified professional before you change payment plans, borrowing or tax timing.