Open-banking feeds: Real-time cashflow forecasting for SMEs

If you run a growing business, you know the difference between “profitable on paper” and cash actually in the bank. With interest rates still elevated and lenders asking tougher questions, cashflow forecasting for SMEs has shifted from nice-to-have to non-negotiable. Open-banking feeds now make it realistic to build a live, rolling cash view without wrestling spreadsheets. That matters in 2025/26: annual consumer price inflation sat at 3.8% in September 2025, nearly double the Bank of England’s 2% target, keeping input costs and finance costs sensitive to shocks (ONS, 2025).

At the same time, the Office for Budget Responsibility expects real GDP growth of around 1.0% in 2025 – steady but hardly forgiving if working capital is tight (OBR, 2025). In this context, real-time forecasting gives you the visibility to price properly, plan investment with confidence, and reassure banks and boards that you’re on top of liquidity.

What open-banking feeds actually do

Open-banking lets you give secure, read-only access to your bank transactions via regulated APIs. Instead of exporting .CSV files and tidying them up, your accounting or forecasting app pulls cleared transactions daily – often several times a day – and categorises them automatically. That unlocks three powerful outcomes:

• Single source of truth: Everyone sees the same numbers, updated from your bank, not a spreadsheet copy.
• Faster close: Reconciliations happen in the background; month-end becomes days, not weeks.
• Forward view: Forecasts update as cash moves, so decisions reflect today’s position, not last month’s.

Many clients connect feeds from major UK banks into their cloud ledger, then into a forecasting tool.

Building a rolling 13-week forecast that actually gets used

A forecast only helps if you trust it and it’s easy to update. We recommend a simple 13-week model driven by open-banking data and a handful of assumptions:

• Cash in: Start with actual bank-cleared receipts. Overlay expected customer payments based on agreed terms and debtor days. If you offer subscriptions or repeat billing, set up receivables schedules so that the tool automatically projects renewals.
• Cash out: Pull supplier payments, payroll, VAT, PAYE, rent and finance costs directly from the ledger. Mark fixed items (e.g. rent) and variable drivers (e.g. cost of goods sold as a percentage of sales).
• Variance tracking: Lock each Friday as a “checkpoint.” Compare last week’s forecast to actuals. Where did collections slip? Which supplier payments were brought forward? Use those variances to refine assumptions rather than rebuilding the model every time.
• Triggers and buffers: Define minimum cash headroom by week. Set alerts if the forecast dips below that line, so we can act early – chasing debtors, flexing payment runs, or adjusting inventory.

Example: A distributor with £6m turnover has recurring month-end surprises because card receipts are batched unpredictably. By connecting open-banking feeds and tagging inflows by channel, their receipts timing is recalibrated, safety stock trimmed by two weeks, and a modest extension to supplier terms negotiated. Within one quarter, the 13-week forecast could show a consistent £250k headroom improvement and remove the need for emergency overdraft extensions.

Meeting lender expectations without the drama

Lenders and investors want evidence that you understand your cash cycle and can withstand bumps. With growth prospects modest in 2025 (OBR, 2025), they will scrutinise affordability and covenant headroom. Real-time forecasts let us package the right evidence, quickly:

• Covenant packs: Interest cover: Show trailing twelve-month EBITDA and forward interest schedules; test rate shocks at +100 bps. Leverage: Track net debt against rolling EBITDA; highlight de-levering plans if growth softens.
• Refinancing support: Provide lenders with read-only access to cash dashboards, so they can see receipts behaviour and order book conversion without repeated data requests.
• Scenario planning: Model events like a delayed contract, a wage increase or a rise in energy costs. With CPI still at 3.8% in September 2025 (ONS, 2025), price and cost sensitivities should be stress-tested before you commit.

Controls and governance – because automation needs guardrails

Open-banking connections are secure and permission-based, but good governance matters, especially if you report to a board or external investors. We embed lightweight controls so automation doesn’t become a blind spot:

• Role-based permissions: Limit who can connect new bank accounts or change rules; review quarterly.
• Bank-rule reviews: Sample categories monthly; fix mis-postings that could distort forecasts.
• Approvals: Separate who prepares and who approves; log approvals in your payables tool.
• Audit trail: Export reconciliations, aged debt, and forecast vs actual summaries before board and lender meetings.

A further change on the horizon: Companies House is implementing the Economic Crime and Corporate Transparency Act. From 1 April 2027, small and micro-entity companies will have to file a profit and loss account alongside the balance sheet – abridged accounts will go – increasing external visibility of performance (Companies House, 2025). Strong cash forecasting and governance now will make those disclosures easier to stand behind.

Data you can explain – and act on

Forecasting should help you run your business, not just satisfy compliance requirements. We focus your dashboards on a handful of metrics that drive day-to-day decisions:

• Debtor days: Set a firm target by segment; show best and worst-paying customers. Pair with promised-to-pay dates to prioritise calls.
• Stock cover: Tie purchase orders to sales forecasts; flag slow movers early to discount or bundle.
• Cash-out date: For scale-ups burning cash, show the week funds hit zero under base and downside scenarios.
• VAT visibility: Surface upcoming VAT liabilities from the ledger so quarter-end cash pinch points don’t surprise you.

Remember the backdrop: the price level is still rising faster than target, which compresses real margins unless pricing keeps pace. Building a live, explainable model means your managers can identify issues early enough to reprice, reschedule, or reduce costs – before the month is over.

Implementation roadmap: From pilot to business as usual

We typically move clients through a fast but controlled sequence:

1. Discovery: Map bank accounts, merchant providers, payment gateways and ledgers. Confirm approval workflows and banking mandates.
2. Connect feeds: Use open-banking APIs for each account. Back-fill 12–24 months for baseline trends. Lock down permissions.
3. Design model: Build a 13-week cashflow forecasting template for SMEs aligned to your revenue model – project-based, subscription, or inventory-led.
4. Calibrate: Reconcile historic forecasts to actuals. Set debtor-day and stock-turn assumptions from your own data, not generic benchmarks.
5. Controls & training: Document rules, reviews and approvals; train budget holders to interpret dashboards and raise early warnings.
6. Review cadence: Weekly 30-minute cash huddle; monthly working capital review with actions; quarterly board pack refresh.

If you want a sense check on your setup or a pilot with one business unit, we can get you moving quickly – arrange a call with us.

Wrapping up

Interest rates may ease, but inflation at 3.8% as of September 2025 and OBR’s 1.0% growth outlook mean the operating environment still rewards discipline. Real-time cashflow forecasting for SMEs turns bank data into day-by-day visibility, letting you act early – re-phase payments, accelerate collections, adjust stock, or evidence headroom to lenders. The direction of company reporting reform also points to more transparency on results in the medium term – another reason to lift the standard now.

If you’d like a practical review of your current process, we’ll benchmark your debtor days, stock cover and runway, plug in open-banking feeds, and implement a 13-week model your board will actually use. Get started with cashflow forecasting for SMEs – speak to our team.