From feast to famine: forecasting cashflow with uneven income

Cashflow forecasting is easy when revenue is predictable, but becomes much harder when income arrives in spikes, deals slip, and customers pay late.

For many growing businesses, feast-or-famine cashflow is the norm, not the exception. Large contracts land irregularly. Sales cycles stretch. Renewal dates cluster. Costs, meanwhile, remain stubbornly consistent.

This article explains how to forecast cashflow realistically when income is volatile. You’ll learn how to model best, base, and worst-case scenarios, plan buffers for delays, and make smarter hiring and equity decisions based on cash reality rather than optimistic revenue curves.

Why uneven cashflow breaks otherwise healthy businesses

Companies don’t necessarily fail because demand disappears, but often because cash runs out before plans catch up.

Revenue charts often look reassuring on paper, but these numbers don’t always equate with cash income. 

When income is lumpy, a few common patterns quietly undermine forecasts:

• Deals closing later than planned.
• Customers paying on 60 or 90-day terms.
• Renewals clustering in one or two months.
• Costs rising steadily while revenue arrives sporadically.

According to UK insolvency guidance, poor cashflow management remains one of the leading causes of business failure, even among profitable companies.

Why cash runway matters more than revenue curves

Founders and leaders often anchor forecasts around revenue trajectories: monthly growth rates, ARR curves, or pipeline value.

These are useful, but they are not the question the business actually needs answered.

The real question is simpler: How many months of cash do we have if things don’t go to plan?

Cash runway forces uncomfortable clarity because it strips away assumptions. A £2m revenue forecast is irrelevant if most of it arrives after costs are already committed.

Runway matters because it determines:

• How much risk the company can absorb.
• Whether delays are survivable or existential.
• How much influence leadership has in negotiations.

Investors consistently emphasise this distinction. As Y Combinator’s guidance on financial planning makes clear, companies are more likely to fail thanks to running out of cash than lack of revenue. 

Revenue shows direction, but runway determines survival.

Scenario modelling: stop forecasting a single future

If your cashflow model assumes one outcome, it is incomplete.

Volatile income means the future is inherently uncertain. Pretending otherwise increases that risk. 

Scenario modelling exists to surface that uncertainty early, while decisions are still reversible.

At a minimum, leaders should model three parallel futures, not one optimistic narrative.

Best case: opportunity, not permission

The best-case scenario assumes:

• Deals close broadly on time
• Customers pay within agreed terms
• Costs remain stable

This scenario is useful, but it is frequently misused. Best case should inform opportunity planning, telling you what you could accelerate if things go unusually well, not baseline commitments.

Hiring ahead of cash, locking in long-term spend, or raising expectations based on best case turns upside into fragility.

Base case: the plan you actually operate against

Your base case should reflect how the business usually behaves, not how you wish it behaved.

In most organisations, that means assuming:

• Some deals slip by 30–60 days
• A portion of invoices are paid late
• Small, unplanned costs appear

This is the scenario that should guide hiring plans, budget approvals, and equity decisions. If a decision only works in the best case, it is not ready to be made.

Too many companies treat the base case as pessimistic. In reality, it is simply honest.

Worst case: resilience testing, not negativity

Worst-case modelling is often avoided because it feels uncomfortable. Leaders worry it sends the wrong signal or dampens ambition.

That is a mistake.

The purpose of worst-case modelling is not to predict failure. It is to understand exposure.

A useful worst case asks questions such as:

• What if our two largest deals slip by a quarter?
• What if our biggest customer delays payment by 90 days?
• What if one key hire or supplier cost increases unexpectedly?

The goal is to identify decision thresholds: the points at which action would be required. That might mean pausing hiring, renegotiating terms, or accelerating fundraising earlier than planned.

When those thresholds are known in advance, decisions feel deliberate rather than reactive.

Why scenarios change behaviour, not just spreadsheets

Scenario modelling only works if it influences behaviour.

That means explicitly linking scenarios to actions, such as:

• If runway drops below X months, we pause new hires.
• If the worst case becomes base case, we reduce discretionary spend.
• If best case materialises for two consecutive months, we unlock investment.

The most resilient companies do not forecast a single future and hope for the best. They prepare for several futures and retain the ability to choose.

Scenarios like these are designed to preserve your ability to act when reality shifts.

Buffer planning: assume payments will slip

Late payments are a feature of commercial reality.

Research from the UK’s Small Business Commissioner consistently shows that late payment is widespread, particularly for smaller suppliers dealing with larger organisations. 

Cashflow models should therefore assume friction.

Practical buffer planning includes:

• Adding 30–60 days to expected payment dates
• Stress-testing what happens if your top two customers pay late
• Separating invoiced revenue from collected cash
• Modelling tax liabilities independently of income timing

The aim is to prevent surprises. Buffers create decision-making space. Without them, leadership ends up reacting under pressure, by cutting costs abruptly or raising capital on unfavourable terms.

The key is to hope customers pay on time, but to plan as if they won’t.

Aligning costs, hiring, and equity with cash reality

One of the most dangerous moments for growing companies is when long-term commitments are made on short-term optimism.

Hiring, in particular, is often justified by revenue forecasts rather than cash availability.

A resilient approach asks different questions:

• If revenue slips by two months, can we still cover payroll?
• Are fixed costs rising faster than predictable cash inflows?
• Do equity grants and incentives reflect sustainable growth, not temporary spikes?

This is where finance, people strategy, and equity decisions intersect.

Equity incentives can help align long-term commitment with uncertain short-term cash, but only if they are designed deliberately. Over-hiring on the assumption that revenue will catch up is one of the most common precursors to painful restructures.

Making cashflow visible across leadership teams

Cashflow risk is often concentrated in finance teams, while decisions that affect it are made elsewhere.

That disconnect creates blind spots.

Effective leaders make cash visibility a shared responsibility. This does not mean turning every manager into a finance expert. It means ensuring that:

• Leaders understand runway, not just revenue
• Hiring plans reference cash scenarios explicitly
• Major spend decisions include downside analysis
• Incentives reinforce sustainability, not short-term wins

Visual tools like simple cashflow charts, runway trackers, and scenario dashboards are often more effective than dense spreadsheets. The goal is shared understanding. 

Cashflow resilience improves when everyone sees the same reality.

Summary

Feast-or-famine income is a structural feature of many growing businesses. What matters is whether your cashflow model reflects that reality.

If your forecasts assume perfect timing, uninterrupted growth, and frictionless payments, they are offering reassurance rather than protection.

Rebuild your model around runway, scenarios, and buffers. Align hiring and equity decisions with cash, not optimism. Make cash visibility a leadership habit, not a finance function.

Sustainable growth is not about avoiding volatility. It is about surviving it long enough to win.

Vestd helps companies design and manage share schemes that reward contribution while protecting cash and supporting sustainable decisions.

Book a call to explore how it could work for your business.