A cash movement you did not expect has one of three explanations: the bank and the forecast are measuring different things, an item landed on a different day from the one you planned for, or something is missing. Tracing it means working through those three in order, starting at the bank, before looking for a cause. This page is the checklist for two situations a finance team meets: the balance that moved overnight and needs explaining this morning, and the monthly gap between forecast and bank that has happened three months running. Each checklist names the figure to have in front of you, the check to run and what to do when the bank and the forecast disagree.
Before You Start: Decide Which Balance You Are Tracing
Most overnight surprises begin with two figures that were never the same thing. A business bank account shows more than one balance for the same account at the same moment, and the labels vary by bank: one may show an account balance and a balance including pending transactions, another an available balance and a cleared balance. Which items each figure includes also varies. A pending card payment may reduce one figure and not another; a cheque paid in may be counted in one and excluded from the other until it clears. Check your bank's own definitions once, write them down, and use the same figure every day. A comparison between yesterday's cleared balance and this morning's available balance is not a comparison.
The forecast is measuring something different again. A cash flow forecast built from your accounting platform opens from the reconciled balance in the ledger, not from the bank feed. In Float, the opening balance is the sum of the reconciled balances of the bank accounts you have included (the "Balance in Xero" or "In QuickBooks balance" figure for each account), and transactions that have not yet been reconciled do not import at all. So on any morning there are three figures in play: what the bank says it holds, what the bank will let you spend, and what the ledger has reconciled. When the bank and the forecast disagree on the opening figure, the difference is what sits between them: transactions posted at the bank and not yet reconciled, and any account you have left out of the forecast. The first thing to do is reconcile.
That is also why reconciliation is the control it is. HMRC's own guidance for its enquiry staff describes the purpose of a bank reconciliation as making sure that all entries in the cash book and bank statements have been accounted for. There is no statutory reconciliation frequency for an ordinary trading company. Float's help centre recommends reconciling every day, or at least every week, because the forecast can only be as current as the reconciled ledger it opens from.
Tracing An Overnight Cash Movement: Six Checks In Order
Work through these in sequence and stop when the movement is explained.
Step 1: Quantify the movement on one basis. Write down yesterday's closing balance and this morning's opening balance for each account, using the same balance type for both, with the time each was taken. Add the accounts together only after you have done this per account, and keep any foreign-currency account in its own currency for now. The number you are tracing is the difference between the two figures on the same basis; if you cannot get the same basis for both days, use the statement balance, which is the figure the ledger will eventually match.
Step 2: List everything the bank posted since yesterday's close, largest first. Pull the transactions dated since the closing figure and sort by size, because a few large items usually account for the whole movement: a supplier payment run, a Direct Debit, a loan repayment, payroll, a tax payment or a large receipt. Tick each against the forecast. What is left is the investigation.
Step 3: Check whether the timing explains it. Each payment scheme lands on a predictable day. In the UK, a Bacs payment or Direct Debit is entered on the third working day of its cycle, so a file submitted on Monday lands on Wednesday, and Saturdays, Sundays and English public holidays do not count, which is why a Monday or post-holiday morning can carry more than one day's entries. A Faster Payment usually arrives almost immediately but can take up to two hours, and can arrive on a weekend. A CHAPS payment settles the same working day, and a cheque paid in on a weekday is normally available by 23:59 the next weekday. If an item you forecast for Friday landed on Thursday, or one you forecast for the 28th was collected on the 25th, you have found a timing variance, not a cash problem, and the fix is the date in the forecast.
Step 4: Separate what has settled from what is only pending. A card authorisation reduces the available balance before any money leaves. A cheque paid in shows on one balance before it clears. If the movement is in the available figure and not in the statement figure, it is a pending item, and the question is whether it will settle or lapse.
Step 5: Find the expected receipts that did not arrive. Open the list of invoices you expected to be paid by yesterday and mark each one paid or not. An expected receipt that has not arrived is the one item on this list that changes the plan rather than the record. A customer who was due on Friday and has not paid is a call to make this morning, and an expected date to move in the forecast so that the rest of the week is read on what is likely rather than what was agreed.
Step 6: If a movement is still unexplained, treat it as a control question and stop. Do not post a balancing entry to make the ledger agree. Note who initiated and approved anything you cannot match, freeze further payments from that account if the amount is material, and hand the item to the finance director. Investigating an unauthorised or erroneous payment is a different procedure from this one, and this page does not cover it.
A worked example: one morning, one movement
The figures below are invented for the example; the payment timings are real. Lister & Byrne Ltd is a fictional 24-person consultancy on Xero with two bank accounts and a finance team of three. On Wednesday 21 October 2026 the finance manager opens the bank and sees a statement balance of £96,850 against £142,300 at yesterday's close. The available balance reads £95,500. The forecast, run last Thursday, had this morning's opening at £131,000.
| Check | Item | Amount | Finding |
|---|---|---|---|
| 1 | Movement, statement basis, 17:00 Tue to 08:30 Wed | £45,450 out | The figure to trace |
| 1 | Available balance below statement balance | £1,350 | A card authorisation awaiting settlement; not a movement |
| 2 and 3 | Bacs supplier run, submitted Monday, entered Wednesday | £28,400 | In the forecast for today; timing correct |
| 2 and 3 | Loan repayment by Direct Debit | £12,000 | In the forecast for today; correct |
| 2 and 3 | Vehicle lease Direct Debit | £4,850 | Forecast for next Wednesday; collected a week earlier than assumed |
| 2 | Bank charges | £200 | Never in the forecast; a missing recurring item |
| 5 | Invoice 2041, expected Friday 16 October | £18,500 | Not received; customer pays late |
| 5 | Invoice 2036, expected Tuesday 13 October | £10,600 | Not received; overdue, still assumed paid |
The £45,450 is fully explained by four posted items, three of which the forecast already had, one of them on the wrong day. The £34,150 gap between the forecast's opening and the bank is a different question with a different answer: two receipts that have not arrived (£29,100), one Direct Debit that landed a week early (£4,850) and one small item that was never forecast (£200). Nothing here is unexplained, nothing is a control matter, and the morning's work is two phone calls and three date changes.
How To Find Why A Monthly Cash Gap Keeps Recurring
A gap that appears once is noise. A gap that appears three months running is a forecast assumption that is wrong in the same direction every time, and the way to find it is to compare the forecast with what cleared, line by line, for each of the three months, and look for the variance that repeats. ICAEW's guidance for finance professionals on cash flow forecasting puts the principle in one line: assess the accuracy of forecasts against actuals in order to improve processes. ACCA's cash flow template for business owners does the same thing month by month and calls the comparison sheet the place where the real analysis work is done. The grouping of lines below is ours, and the method is the one those two principles point to. One cause has numbers behind it before you start. Department for Business and Trade statistics published in July 2026 put the median large UK business at 32 days to pay its suppliers and 15% of invoices by number paid after the agreed terms, and research for the same department published in 2025 found that about a third of small businesses with 10 to 49 employees that offer trade credit had overdue invoices when surveyed at the start of that year.
Step 1: Freeze the forecast you had at the start of each month. Take the version of the forecast that existed on the first working day of each of the three months, not the current, corrected version. If you do not keep versions, start now: the forecast as it stood is the only evidence of what you believed.
Step 2: Lay out forecast against cleared cash by line. For each month, put the forecast and the cleared figure side by side for customer receipts, supplier payments, payroll and its taxes, VAT and other tax payments, financing and one-off items, and everything else. Work from the reconciled ledger, so that both columns are on the same basis.
Step 3: Label every variance before you name a cause. Each difference is one of four things: a timing variance, where the right amount landed in the wrong month; an amount variance, where the item landed on time but at a different figure; a missing item, which was never in the forecast; or an opening-balance variance, where the month started from a different figure than the forecast assumed. Label first, because each has a different fix and a different cause.
Step 4: Look for the variance that repeats. A timing variance on customer receipts in all three months means the forecast is using due dates, or contractual terms, where your customers pay to their own habits. Your customers have their own pattern, and the fix is to forecast each invoice on the date that customer usually pays. Our guide to how payment terms and late payment shape your cash timing sets out how to build that from your own history. An amount variance that repeats is usually a cost line that has grown since the assumption was set.
Step 5: Check the statutory dates against the days they landed. In the UK, PAYE and National Insurance must reach HMRC as cleared funds by the 22nd of the following tax month when paid electronically, or by the 19th by cheque through the post, and tax months run from the 6th to the 5th. A VAT return and payment are usually due one calendar month and seven days after the end of the VAT period, and if you pay by Direct Debit the money is collected three working days after that deadline, which can move the payment into the next month. Corporation Tax for a company with taxable profits up to £1.5 million, shared between associated companies, is due nine months and one day after the year end. HMRC's own guidance says a Faster Payment usually reaches it the same or next day including weekends, a CHAPS payment the same working day, and a Bacs payment in three working days. A forecast that places these on the due date rather than the collection day will show a recurring variance that is nothing but the calendar.
Step 6: Re-run the worst month by week. A month can open and close above the floor and still go below it in between, because payroll, a VAT payment and a slow receipt can land in the same seven days. If the month-end figures reconcile but the business still felt short, rebuild that month week by week. ICAEW's guidance advises considering whether to report on monthly, weekly or daily cash movements, and a weekly view is the only one that shows an intra-month low point. Our guide to the 13-week cash flow forecast covers the build.
Step 7: Change one assumption, then watch the next month. Fix the variance that repeats and leave the rest alone. If receipts are the recurring miss, move expected dates onto the pattern your customers show and keep the due dates where they belong, on the invoice. If it is a cost line, update the amount and note the reason. Then compare again at the next month end. If the gap closes, you have found it; if it moves to another line, you have found the next one.
A worked example: three months, one repeating variance
Again the figures are invented and labelled as such; the statutory dates are real. Lister & Byrne Ltd forecast a closing balance each month and the bank showed less each time.
| Month | Forecast closing | Cleared closing | Gap |
|---|---|---|---|
| July 2026 | £168,000 | £139,900 | £28,100 short |
| August 2026 | £181,000 | £145,700 | £35,300 short |
| September 2026 | £174,000 | £136,200 | £37,800 short |
The gap grows, which is the second warning sign. Laid out by line for September, with each variance labelled, it looks like this.
| Line | Forecast | Cleared | Variance | Label |
|---|---|---|---|---|
| Customer receipts | £312,000 | £281,400 | £30,600 short | Timing: four invoices due in September paid in October |
| Supplier payments | £118,000 | £117,600 | £400 favourable | Amount: within tolerance |
| Payroll, PAYE and pension | £131,000 | £132,100 | £1,100 short | Amount: a hire's National Insurance and pension not in the assumption |
| VAT and Corporation Tax | £24,000 | £24,000 | Nil | On forecast |
| Financing and one-off items | £12,000 | £16,800 | £4,800 short | Missing item: an annual software renewal |
| Other | £8,000 | £9,700 | £1,700 short | Amount: bank charges and expenses |
July and August show the same £25,000 to £30,000 timing variance on receipts and the same £1,100 on payroll. The renewal appears once. So there are two recurring misses, one large and one small, and one that is not a miss at all. The receipts variance is the forecast using 30-day terms for customers who pay at about 42 days; moving every open invoice onto the customer's own average closes most of it. The payroll variance is an assumption set before a hire; updating it closes the rest. The renewal goes into the forecast for next August. Run week by week, September also showed a low point of £91,400 on Thursday 10 September, when the VAT Direct Debit for the quarter to 31 July was collected three working days after the 7 September deadline, in the same week as the month's largest supplier run: £44,800 below the month-end figure, which a monthly view would never have shown.
What Not To Conclude From A Gap
A gap on the bank is not evidence that the business is unprofitable, and a profit is not evidence that the gap will close. Profit and cash are measured at different moments, and our guide to why a profitable business runs out of cash sets out the mechanism and the seven checks that find which timing gap is yours. This page assumes you have read it and are now working the numbers.
Two other causes deserve their own pages rather than a line here. One is the gap that widens as the business wins work, which is the working-capital pattern of growth, covered in our guide to why growth makes cash lumpier. The other returns in the same months every year and is seasonal; our guide to forecasting cash flow for a seasonal business covers that case.
Every list of common causes you will find runs the same items: late-paying customers, lumpy tax and payroll, growth absorbing working capital, monthly views hiding weekly troughs, stale receivables data and manual spreadsheets. Only the first of those is quantified in UK official statistics. The rest are things to test in your own numbers, in the order above, not a ranking of how likely they are.
How Float Fits
Float is the forecast this checklist is run against. It connects to Xero or QuickBooks Online, imports once a day at an hour you set, with a manual sync when you need one, and opens the forecast from the reconciled balance of the bank accounts you have included. Unreconciled transactions do not import, and historic balances are calculated backwards from today's reconciled position, so the forecast's opening figure is the ledger's figure and the difference from the bank is the reconciliation queue. Transfers between included accounts net to zero in their own row; an account you exclude takes its transactions with it. The connection is one-way: nothing Float does writes back to your accounting platform.
Every invoice and bill carries an expected payment date, taken from your accounting platform and falling back to the due date, and you can change it in Float singly or in a batch without touching the ledger. Overdue items are assumed to be paid today and flagged, which is the finance manager's cue to re-date them or exclude them. For Xero users, Smart Expected Dates applies each customer's and supplier's average lateness to new invoices and bills automatically; it is available for Xero users only, with support for QuickBooks Online coming soon. The List View shows every budget, invoice, bill and cleared transaction day by day over any date range, with budgets filtered out if you only want what has been invoiced, and the Budget Variance insight compares budget with what cleared for the last month or the last three months by account. The weekly view runs 13 weeks; a cash threshold line shows the date the balance is due to cross it.
Float does not connect to your bank, does not show intraday movements, and does not send alerts, notifications or scheduled reports: the checks above are the finance team's, run on the reconciled data. Xero and QuickBooks Online are live; Sage Intacct is on the waitlist. See pricing for plans.
Frequently Asked Questions
Why does my forecast opening balance not match the bank?
A forecast built from an accounting platform opens from the reconciled ledger balance, not the bank feed, so the difference is normally the transactions that have posted at the bank but have not yet been reconciled. Reconcile, re-sync, and compare the figures again on the same basis. If a difference remains after reconciliation, an included or excluded account is the next thing to check.
What is the difference between the available balance and the statement balance?
The labels vary by bank, but the available figure usually takes account of pending items such as card authorisations and uncleared cheques, while the statement or account balance shows what has posted. A movement that appears in one and not the other is a pending item rather than a transaction. Use one figure consistently and check your bank's own definitions.
How do I investigate a sudden change in our cash position?
Quantify the movement on one balance basis, list everything the bank posted since the last figure with the largest first, and check each against the forecast for timing before looking for a cause. Then separate settled from pending items and mark which expected receipts have not arrived. Anything still unexplained after those checks is a control question for the finance director, not a forecasting question.
Why do we keep missing our monthly cash forecast?
A miss that repeats in the same direction is a forecast assumption that is wrong every month. Compare the forecast with what cleared by line for three months, label each variance as timing, amount, missing item or opening balance, and find the one that recurs. The first one to test is customer receipts forecast on due dates rather than the dates customers actually pay, because late payment is the one cause UK official statistics quantify.
Should a cash flow forecast use invoice due dates or expected payment dates?
Expected dates. A due date is what the invoice says; an expected date is what that customer's payment history says, and the two can differ by weeks. ICAEW's cash flow forecasting guidance advises assigning expected, worst-case and best-case dates to receipts and payments, and a forecast that uses due dates will overstate cash in exactly the weeks that matter.
How often should a finance team reconcile the bank?
There is no statutory frequency for an ordinary trading company. Float recommends reconciling every day, or at least every week, because a forecast that opens from the reconciled balance can only be as current as the last reconciliation. Whatever frequency you choose, reconcile the day before any morning on which the cash position matters.
Why did a Direct Debit or Bacs payment land on a different day from the one I forecast?
Bacs payments and Direct Debits are entered on the third working day of the Bacs cycle, and Saturdays, Sundays and English public holidays do not count, so a payment submitted on a Thursday lands on the following Monday. HMRC collects VAT by Direct Debit three working days after the return deadline. Forecast these on the day the money leaves, not the day the instruction is given or the liability falls due.
Can a monthly forecast hide a cash shortfall?
Yes. A month can open and close above your floor while the balance goes below it in between, because payroll, a tax payment and a delayed receipt can fall in the same week. If the month-end figures reconcile but the business still ran short, rebuild that month week by week and read the low point. Weekly resolution is the only view that shows it.
Does Float show real-time bank balances or alert me to a cash movement?
No. Float imports reconciled data from Xero or QuickBooks Online once a day at an hour you set, with a manual sync available, and does not connect to your bank or show intraday movements. It shows the date the forecast crosses a cash threshold you set, but it does not send alerts, notifications or scheduled reports; the finance team runs the checks on this page.
Float connects to Xero or QuickBooks Online and gives finance teams a rolling 13-week cash forecast built from reconciled accounting data, with expected payment dates on every invoice and bill. Start a free trial or see pricing.
