A lot of cash crunches can be seen coming months ahead, as long as someone writes the numbers down. A forecast is your best estimate of what's coming in and going out over the next year. A cash-flow projection puts those amounts in the month they actually hit the bank.
Forecast and cash flow are different
A forecast tells you whether the year should be profitable. A cash-flow projection tells you if there will be enough in the account to pay the bills in March. You can be profitable on paper and still run short, because customers pay late, a big purchase lands in one month, or a tax payment comes due before the income that created it has arrived. You want both.
Start from your past books
The best starting point is what actually happened. Take the last year or two and lay it out by month:
- Sales, with the slow and busy months showing.
- Fixed costs that repeat: rent, insurance, loan payments, software, wages.
- Costs that move with sales, like materials or subcontractors.
- One-off items you shouldn't repeat, and known changes you should add (a rent increase, a new hire, a vehicle that needs replacing).
If the books are behind, the forecast will be guesswork. Catching up the bookkeeping comes first.
Put the tax in as known payments
Tax is one of the few outflows you can predict with real dates, so put it in:
- GST. Monthly and quarterly filers file and pay 1 month after the end of each period. Most annual filers have 3 months after year-end. A sole proprietor who files annually, has a December 31 year-end and had business income for the year pays by April 30 and files by June 15. More in our post on GST filing.
- Payroll remittances. If you have employees, how often you remit and when it's due depend on your remitter type. The CRA bases the due dates on your average monthly withholding from two calendar years earlier. Our post on payroll remittances explains the types.
- Income tax instalments. Outside Quebec, you generally pay instalments for 2026 if your net tax owing is over $3,000 for 2026 and was also over $3,000 in 2025 or 2024. The usual due dates are March 15, June 15, September 15 and December 15. Our post on how instalments work has the details.
Stress-test it
A forecast built on the good case isn't much help. Once the base version works, change one thing at a time and watch the bank balance month by month:
- Sales come in well under last year.
- Your biggest customer starts paying a couple of months late.
- The rate on a variable loan or line of credit goes up.
- A major repair or equipment purchase lands in your slowest month.
The useful output is the lowest point. If the balance goes negative in any month, you know how much cushion or credit you need and when, while there's still time to arrange it.
Households can do the same
The same layout works at home: pay, mortgage or rent, a mortgage renewal at a different rate, childcare, a tax balance owing, and big one-off costs. Then run the same tests: a job loss, a renewal at a higher rate, a car that dies.
How we help
Reading the numbers is part of our consulting work. Personal or business, we build the forecast and stress-test it, then explain what the numbers mean for the decision in front of you and show our reasoning so you can push back on it.