Three Way Financial Forecasting for Business Planning
Integrated Profit & Loss, Balance Sheet, and Cash Flow Projections
Service at a Glance
Personalized scope & lodgementWage earners, investment property owners, CGT, crypto & standard returns
100% online video meetings (Outlook Calendar) or in-person
Direct electronic ATO portal lodgement by Registered Tax Agent
Draft explained and authorized by you before electronic submission
- Pre-lodgement draft walkthrough & written client sign-off
- Extended ATO tax agent lodgement deadlines available
- Transparent upfront quoting & zero lodgement without approval
What are the three parts of a three way forecast?
The forecast profit and loss statement estimates income and expenses over the planned periods. The forecast balance sheet shows the expected position of assets, liabilities and equity at each date. The forecast cash flow statement tracks when money is expected to come in and go out. The three are linked: changes in trading activity, working capital, investment and finance affect more than one statement.
For example, an equipment purchase may reduce cash and add an asset, while borrowing may add cash and a liability. Future repayments affect cash and the loan balance; depreciation affects accounting profit over time. A connected forecast helps keep those relationships consistent instead of treating a profit projection as a complete financing plan.
The model should also reflect debtor collections, stock purchases and supplier payments where material. Sales recorded this month may be collected later. That timing can create a cash requirement even when the profit and loss forecast shows a positive result.
Forecast Profit & Loss Statement
Estimates income and expenses over the planned periods, showing accounting profitability and gross margins.
Forecast Balance Sheet
Shows the expected position of assets, liabilities and equity at each future date, tracking net worth and debt obligations.
Forecast Cash Flow Statement
Tracks exactly when money is expected to come in and go out, preventing profitable plans from causing funding shortages.
When is integrated forecasting useful?
A three way forecast is useful when management needs to understand how a decision changes both results and financial position. This may arise before a new site, significant hiring, a major contract, equipment financing or discussions with a lender. It can also support a recurring planning cycle when a business has material debt, inventory or uneven cash receipts.
Not every decision needs three statements. A short-term cash question may be answered by a focused cash flow forecast; the additional balance sheet work is useful when assets, debt, working capital and retained results materially affect the plan. Our three statement forecasting services are scoped to the purpose, period and level of detail needed.
Opening a New Site
Balancing fit-out leases, asset depreciation, and initial operating deficits.
Significant Headcount Growth
Understanding the lag between payroll liabilities and customer payments.
Securing Major Commercial Contracts
Evaluating upfront inventory purchasing against milestone invoicing.
Equipment & Asset Financing
Linking capex asset value, debt liabilities, and cash loan payments.
Discussions with Lenders & Banks
Supplying comprehensive 3-way balance sheet and debt-coverage covenants.
Managing Material Debt & Inventory
Navigating uneven cash receipts and working capital fluctuations.
Government Business Guidance: Business.gov.au explains that a cash flow forecast can be prepared from estimated figures for future periods, and that cash statements help identify potential shortages and surpluses. Connecting that cash view to projected profit and financial position provides a broader picture, while still depending on the quality of the inputs.
How is the forecast built?
We begin with recent accounts and establish an opening financial position. We then discuss operational assumptions such as sales, pricing, direct costs, payroll, payment terms and planned spending. Debt terms, tax-related cash payments and other commitments are considered where relevant to the agreed scope. We document significant assumptions and check that the projected statements reconcile.
Agreeing the forecast horizon and monthly or quarterly detail
Setting the timeframe (typically 12, 24, or 36 months) with periodicity matched to commercial decisions.
Reviewing historic trends and unusual transactions
Normalising baseline data to filter out one-off anomalies, non-recurring grants, or abnormal expenses.
Identifying the operating drivers behind sales and costs
Mapping revenue drivers (volumes, conversion, pricing) and direct variable costs (materials, labour).
Projecting receivables, payables, inventory and capital spending
Calculating the working capital timeline, debtor days, supplier payment terms, and equipment capex.
Incorporating financing terms and known obligations
Connecting loan amortization schedules, interest charges, lease contracts, and scheduled tax provisions.
Checking linked statements and explaining the resulting cash path
Reconciling all balance sheet ties, verifying that the cash statement reconciles, and framing key takeaways.
Three Statement Model Consultant Principle
As a three statement model consultant, we distinguish estimates supported by contracts or recent results from assumptions that require more judgement. If the accounts are incomplete, we identify the work needed before relying on a detailed forecast. More formulae cannot compensate for an unreliable opening balance.
What does the forecast help you decide?
The output may show how long existing cash could support an investment under the stated assumptions, when extra funding might be required, or how debt repayments interact with trading results. It may also show whether a proposed growth rate depends on unrealistic customer collections or working capital. These are questions to investigate, not promised outcomes.
Cash Runway for New Investments
How long existing cash reserves can sustain initial losses or capital setup spending under stated assumptions.
Timing & Quantum of External Funding
Exactly which month an overdraft facility, bank equity, or partner injection is required to prevent a cash deficit.
Debt Repayments vs Trading Cash
How principal loan reductions and lease interest payments interact with seasonal operating cash flow.
Feasibility of Proposed Growth Rates
Whether aggressive sales expansion relies on unrealistic customer collection days or overstretched inventory turns.
A base forecast describes one set of assumptions. If you need to compare weaker demand, higher costs or a delayed start, our financial scenario planning services explore alternative conditions and responses. Our broader financial modelling services cover models built around other decisions and levels of complexity. Board reporting services can help present the assumptions and results to directors.
How Financially Up can help
We agree the users and purpose, review records, build the connected forecast within scope and walk you through its outputs. We can discuss a process for updating actual results and revisiting assumptions, if ongoing support is needed.
A lender or investor may request specific supporting material or independent verification; those requirements should be confirmed separately, and no funding outcome is guaranteed.
Scope, assumptions and professional boundaries
The engagement covers the agreed forecast structure, linked calculations, stated assumptions and explanation of the outputs. Tax-related payments may be modelled using agreed assumptions, but specialist tax advice, finance approval, valuation, audit and assurance are separate unless specifically scoped. The forecast supports planning and should not be presented as a guaranteed result or independently verified information.
Financially Up Pty Ltd has more than 10 years of experience, with a team including CPA and IPA members. We offer online and in-person appointments across Australia. We aim to leave decision makers with a forecast they can understand, update where agreed, and question when the business changes.
Registered Tax Agent
TPB Agent #26242127
More than a decade of experience building integrated three-statement financial forecasts.
CPA & IPA Specialists
Qualified Senior Advisors
Delivering linked models decision-makers can understand, update, and question.
Australia-Wide Support
Online & In-Person
Serving clients nationwide via remote video screen-shares or face-to-face appointments.
What to bring to the first discussion
Bring recent financial statements, current management accounts, a budget if available, loan schedules and a description of the decision. Information on pricing, customer payment terms, staffing, planned purchases and existing cash commitments will help establish realistic inputs. We can then agree whether a three way forecast or a more focused analysis is appropriate.
recent financial statements & balance sheets
Past 12 to 24 months of reconciled financial reports.
current management accounts
Year-to-date trading figures, profit margins, and overhead reports.
operational budget if available
Approved targets, spending limits, and departmental plans.
loan schedules & debt facilities
Interest rates, repayment timing, balloon payments, and covenants.
description of the commercial decision
Summary of planned site openings, new equipment, hires, or acquisitions.
pricing, payment terms & staffing
Customer debtor days, supplier credit terms, and recruitment plans.
planned purchases & cash commitments
Quotes for capital assets, lease bonds, and scheduled tax runs.
Frequently Asked Questions
Common questions about three-way forecasting, profit differences, cash guarantees, and funding applications.
Profit does not show when customers pay, when stock is bought or when loan principal must be repaid. An integrated forecast shows how those movements affect cash and the balance sheet.