How to Set Up a Financial Plan & Cash Flow Forecast for the New Year
Establishing a financial plan and cash flow forecast early in the year allows business owners to anticipate needs, allocate resources effectively, and make informed decisions that support both short-term operations and long-term goals. It also provides clear visibility into where money is going, what’s coming in, and how to prepare for both opportunities and challenges ahead. Without a clear plan in place, business decisions can quickly become reactive rather than strategic. Here’s how to start.
Set Your Goals for the Year
Think about what you want to accomplish in the next 12 months, whether it’s gaining more clients, new hires, updating equipment, or improving profitability.
Ask yourself:
Am I planning to hire?
Do I want to invest in equipment or technology?
Will I expand my service offerings?
Am I trying to reduce debt or increase profit margins?
Your financial plan should be the tool that connects those goals with dollars and cents.
Review Last Year’s Numbers
Look at last year’s income, expenses, and major trends. Understanding what worked (and what didn’t) helps you plan more accurately for the year ahead.
Look for:
Trends in income
Seasonal highs and lows
Unexpected expenses
Customer payment delays
Profitability of different services or products
This step ensures your new plan is grounded in the reality of your business.
Create a Simple Financial Plan
Your financial plan doesn’t need to be complicated. Break your plan into three parts:
Revenue
Use last year’s performance and this year’s goals to estimate how much you expect to bring in. Don’t forget to account for new pricing or service changes.
2. Expenses
List your monthly expenses: rent, payroll, utilities, subscriptions, marketing, and planned investments such as new hires or equipment upgrades. This will give you a baseline for your break‑even point.
3. Taxes
Set aside funds throughout the year for estimated taxes, including quarterly taxes, payroll taxes, and sales tax (if applicable).
Create a Cash Flow Forecast
Start with your opening cash balance — the amount of cash you have at the beginning of the month or year. Then break it down into three sections:
Cash Inflows- Estimate customer payments, recurring revenue, loan proceeds (if any), and grants or tax refunds.
Cash Outflows- List monthly expenses, including rent, utilities, employee wages, supplier payments, taxes, and debt payments.
Monthly Net Cash Flow- Subtract outflows from inflows each month. This tells you whether you’ll have a surplus or a shortfall each month.
Be specific about timing — when the money leaves the account matters just as much as how much.
Review, Adjust, Repeat
A financial plan and cash flow forecast are not “set and forget”; they shouldn’t sit in a drawer. Review them each month to adjust for market changes, expense shifts, and new opportunities.
Make it a habit to:
Update your forecast monthly or quarterly
Compare actual results to your projections
Adjust your plan based on new data
A plan that evolves is a plan that works.
Final Thoughts
A clear financial plan and cash flow forecast set the tone for a strong year ahead. With proper preparation and regular review, you gain the clarity to operate strategically and avoid costly surprises.
If you need support building your financial plan or cash flow forecast, Atlantic Accounts offers expert bookkeeping, CFO-level insights, and tax strategy services to guide your business all year long.