The monthly cash gap ignores the balance available at the start

The headline gap is only part of the calculation

A hypothetical owner sees $40,000 of expected receipts and $120,000 of payments for the month and announces an $80,000 funding requirement. That difference matters, but the forecast also needs a verified opening position and the timing of movements. Review the complete cash sequence before deciding how much funding is needed and when it would actually be required.

Reconcile the starting balance

Check bank records and outstanding transactions at the forecast's start. Identify restrictions or amounts whose availability needs confirmation. Do not count an undrawn facility as bank cash or include the same funds in two accounts after a transfer. Ask the accountant to explain any difference between the ledger balance and the cash information being used.

Follow the cash statement structure

Business.gov.au's guidance includes an opening balance, money received and paid, and the resulting closing balance. Use the actual timing and label estimates. A monthly net movement is different from the lowest balance reached within the month. Receipts arriving late may not cover payments required earlier, even where the final monthly total appears manageable.

Source: business.gov.au: Set up a cash flow statement

Test a clear planning example

In the hypothetical example, $20,000 of usable opening cash plus $40,000 received less $120,000 paid gives a negative $60,000 closing position, before other movements. That simplified result does not determine solvency or the earliest cash shortage. Place the transactions on their dates and identify any larger interim gap or uncertainty.

Show the assumptions to the adviser

Provide the opening reconciliation, expected receipts and commitments together. Distinguish confirmed funds from proposed support. Do not improve the result by moving an inconvenient payment date without an actual basis. If the company cannot meet debts as due, seek appropriate advice promptly rather than waiting for the month-end forecast to become actual history.

Update from real transactions

Replace estimates with verified movements and carry forward the reconciled balance. CRP can help organise the review. A useful shortfall figure explains its starting point and timing, allowing the next decision to address the actual funding need rather than only the difference between two monthly totals.