Published by Adam Cooper, founder of ACC Finance Solutions. Insights drawn from a podcast with Paul Cox on The Fractional CFO Show, lightly edited for clarity.
Estimated reading time: 7 minutes
Last updated: July 2026
Paul Cox has run the Shark Trust’s finances for over a decade, and as CEO, he spends every morning thinking about where the charity’s money is coming from. Before Shark Trust, he spent 14 years at the National Marine Aquarium, including running its finances as it grew to a turnover of around £3.5 million.
Roughly half of the Shark Trust’s salary bill is covered by restricted funding: grants tied to a specific project, with milestones and a report at the end. The rest has to come from unrestricted income such as donations, memberships and events, money the charity is free to spend at its own discretion. Those two income types behave in completely different ways. Blending them into a single number on a spreadsheet would give a misleading picture of what is actually available to spend. That distinction, and the discipline Cox applies to it, is a useful illustration of the advantages of a cash flow forecast for any business, including agencies, whose income arrives in more than one shape.
The advantages of a cash flow forecast come down to four things:
- It shows a funding gap before it happens, not after
- It separates confirmed income from income still being chased
- It gives time to act, through new business, a funding or fundraising effort or a planned reserve draw, instead of reacting under pressure
- It keeps a reserve sized to the real gap, not the average month
Restricted and Unrestricted Income: Two Very Different Pots
A restricted grant can only be spent on the purpose the funder agreed to, and charities are duty bound to account for it separately from general funds. Unrestricted income carries no such condition, which gives an organisation more freedom but also less certainty, since it has to be earned or raised rather than contracted in advance. Cox describes a funding environment that has tightened on both fronts. Grant funding is being squeezed as aid budgets are redirected, and more charities are now using AI tools to write and submit a higher volume of grant applications, increasing competition for a shrinking pot. Meanwhile, individual giving is being trimmed as households tighten their own budgets. Forecasting separately for each income type is what lets the Shark Trust see a funding gap coming rather than discovering it at the bank.
The Advantages of a Cash Flow Forecast in Practice
The Shark Trust plans its restricted funding on a rolling two-year cycle. Contracted grant income already secured is mapped out first, then a target is set for new grants still to be won. If that target is missed, core reserves step in to cover the shortfall. Restricted and unrestricted income are tracked as separate pots throughout, because collapsing them into one figure would hide exactly the kind of gap the forecast exists to catch.
“Everyone’s got a responsibility to write grant bids and try and bring more funding in. And then if we miss those targets, then the core reserve has to come in and kind of pick up the slack.” (Paul Cox)
This is the core advantage of a cash flow forecast over simply watching a bank balance. A bank balance tells you what has already happened. A forecast tells you where a gap is likely to open up, weeks or months before it arrives, giving you time to close it through a targeted grant bid, a fundraising push or, if neither lands, a planned draw on reserves rather than an unplanned scramble.
Applying the Same Logic to Retainer and Project Income
Agencies rarely talk in terms of restricted and unrestricted funding, but the underlying pattern will be familiar. Retainer income is the closest equivalent to a restricted grant: contracted, predictable, and matched against agreed scope. Project and one-off client work behaves more like unrestricted income. It gives more flexibility once it lands, but it has to be won, and the timing of when it actually arrives in the bank is far less certain. Our article on agency KPIs that drive profit covers cash runway in more detail, but the principle sits underneath every part of that piece: a forecast that keeps confirmed and unconfirmed income separate is far more useful than one blended total.
ACC’s CFO Perspective
Working with agency founders, the pattern we see most often is a forecast that shows total expected income for the month without distinguishing what is contracted from what is still being chased. That single number can look reassuring right up until a pipeline deal slips by a few weeks and payroll is due regardless. The fix is straightforward: forecast retainer income separately from new business, and hold a reserve sized to your worst-case funding gap rather than your average month, in the same way the Shark Trust holds a core reserve against its grant target. It is a small structural change, and it is usually the difference between a tight month and a genuine crisis.
Why Efficient Processes Keep a Forecast Useful
A forecast only earns its keep if it stays current, and that depends on how much friction sits behind it. At the Shark Trust, everyday finance tasks such as expense capture now happen through a photo of a receipt going straight into Xero, rather than a spreadsheet completed at the end of each month. Cox is careful to keep AI use supervised and channelled through one person in the team, particularly around anything involving sensitive data, and describes checking its output the way you would check a keen but inexperienced junior.
“We recognise ‘him’ as, he is a very productive intern who’s got a really broad scope, who can almost complete any task, but his work needs to be checked. You have to keep an eye on him because he can get a bit carried away and he can be a bit of a people pleaser.” (Paul Cox, on the charity’s relationship with AI)
The advantage of a cash flow forecast is undermined the moment updating it becomes a chore that gets pushed to next week. Lean, well-run bookkeeping processes are what make weekly or monthly forecast updates realistic for a small team, whether that team is running a charity or a growing agency. The forecast itself does not need to be complicated. It needs to be current, and it needs to separate the income you can already count on from the income you are still working to secure.
What This Means for Your Agency
None of this requires specialist software or a finance department. It does require being honest about which income on your forecast is contracted and which is still hoped for. These are the questions we work through with agency founders at ACC Finance Solutions:
Which of this quarter’s income is contracted, and which is still being chased?
Does your reserve reflect your worst-case funding gap, or your average month?
How often is your forecast actually updated: weekly, monthly, or only once it’s too late to matter?
If you want the practical detail on building a forecast from scratch, our companion piece Cash Is King: Forecasting Cash and the Benefits of a Cash Flow Forecast walks through the format step by step. If you are not sure how your own numbers stack up, the ACC Financial Health Check is a good place to start.
A Book Worth Your Time
Cox recommends Give and Take by Adam Grant, a study of givers, takers and matchers in business relationships, and why a giving mindset tends to win out as professional networks become more connected and reputations travel further.
Author bio
ACC Finance are a team of experienced CFOs and management accountants who combine executive financial leadership with practical commercial judgement to work closely with founders and leadership teams to strengthen margins, improve cash flow, and guide critical financial decisions.
Frequently asked questions about the advantages of a cash flow forecast
What are the advantages of a cash flow forecast?
A cash flow forecast shows a funding or income gap before it arrives, rather than after, giving a business time to act through new sales, a funding push or a planned draw on reserves. It also separates confirmed income from income that is still being chased, which a bank balance alone cannot do.
What is the difference between restricted and unrestricted funding?
Restricted funding must be spent on the specific purpose a funder agreed to and has to be accounted for separately from general income. Unrestricted funding can be spent at an organisation’s own discretion, but it typically has to be earned or raised rather than contracted upfront, which makes it harder to predict.
How often should an agency update its cash flow forecast?
Most growing agencies benefit from reviewing their forecast at least monthly, with a weekly check on cash position if project values are large or client payment terms are inconsistent. The right frequency depends on how quickly income and costs can change, but a forecast that is only updated when a problem appears has already lost most of its value.
Can a cash flow forecast help with unpredictable or lumpy client income?
Yes. Forecasting contracted income, such as retainers, separately from income that is still being won, such as new project work, gives a realistic view of the gap between the two. That gap, not the total figure, is what a reserve should be sized against.
