Business
Cash Flow Calculator
Works cash flow, which is a different statement from profit.
Result
Cash in means money actually collected, not invoiced. For contractors those two figures can differ by a month or more, which is precisely where cash-flow trouble hides.
Get a Free Business AuditHow the calculation works
Cash received less cash paid over a period, with the opening and closing balance. The difference from profit comes from timing and from items that affect one and not the other: receivables, payables, inventory movements, capital spending and depreciation all separate the two figures.
What moves the number
- Days customers actually take to pay.
- Payment terms with suppliers.
- Inventory build, which consumes cash.
- Capital spending, which is cash and not expense.
Where this one goes wrong
Growth consumes cash, which is the point businesses most often miss, because growing means buying more inventory and carrying more receivables before the additional revenue arrives, so a rapidly growing profitable business can run out of money. Model the cash, not the profit. Capital spending is the other separator, since it leaves the bank in full and reduces profit gradually through depreciation.
Before you quote
- Model cash separately from profit, by month.
- Plan for growth consuming cash before producing it.
- Treat capital spending as cash out now.
Questions
About this calculator
Why can a profitable business run out of cash?
Because growth consumes cash: more inventory and more receivables are needed before the additional revenue arrives. Capital spending and the timing of collections and payments separate the two figures further.
What is the difference between profit and cash flow?
Profit recognises revenue when earned and spreads capital costs through depreciation; cash flow records money moving. Receivables, payables, inventory and capital spending all affect one and not the other, so both are needed.
How far ahead should cash be forecast?
Far enough to see the next pressure point, which for most small businesses means at least three months by week or month. A forecast that only shows the current month gives no time to act on what it reveals.
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How to use this calculator
- Cash on hand today ($). Enter your own figure; the page starts at $60,000.
- Monthly cash in ($). Collections, not invoices issued.
- Monthly cash out ($). Enter your own figure; the page starts at $88,000.
- Months to project. Enter your own figure; the page starts at 6.
The result updates as you type, so you can try a figure, see what it does to net monthly cash flow, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Cash on hand today | $60,000 |
| Monthly cash in | $96,000 |
| Monthly cash out | $88,000 |
| Months to project | 6 |
What comes out
| Result | Value |
|---|---|
| Net monthly cash flow main result | $8,000 |
| Cash after the projection | $108,000 |
| Annualised net cash flow | $96,000 |
| Months of cover if income stopped | 1 month |
Positive cash flow of $8,000 a month takes you to $108,000 after 6 months.
How sensitive the answer is
Holding everything else steady and changing only cash on hand today, this is what happens to net monthly cash flow. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Cash on hand today ($) | Net monthly cash flow |
|---|---|
| $30,000 | $8,000 |
| $45,000 | $8,000 |
| $60,000 example above | $8,000 |
| $90,000 | $8,000 |
| $120,000 | $8,000 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Cash on hand today ($)
- A money amount, starting at $60,000.
- Monthly cash in ($)
- Collections, not invoices issued.
- Monthly cash out ($)
- A money amount, starting at $88,000.
- Months to project
- A number, between 0 and 120, starting at 6.
What the results tell you
| Result | What it is |
|---|---|
| Net monthly cash flow | The headline result. A money figure. |
| Cash after the projection | A money figure. |
| Annualised net cash flow | A money figure. |
| Months of cover if income stopped | A number. |
Where these figures usually mislead
Business calculations assume the inputs are steady. Seasonality, a few large customers, and slow payment all break that assumption. A figure that looks healthy annually can still leave you short in a given month.
Keep going
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