Cash Flow Calculator

Project cash flow by entering income and expenses to see your future balance.

Formula

Net Cash Flow = Total Cash Inflows − Total Cash Outflows
Ending Cash Balance = Beginning Cash + Net Cash Flow

How to Calculate

Cash flow calculation starts with your beginning cash balance, then adds all money coming in (cash inflows) and subtracts all money going out (cash outflows) for a given period. Cash inflows include customer payments, investment income, loan proceeds, and any other cash received. Cash outflows include rent, payroll, suppliers, taxes, loan payments, and owner draws.

A critical distinction is that cash flow differs from profit. You might be profitable on paper but cash-negative because customers have not paid their invoices yet, or because you invested in inventory or equipment. This is why profitable businesses can still fail—they run out of cash before collecting what they are owed.

To create a cash flow projection, estimate inflows and outflows for each future week or month. Be conservative with inflows (assume some late payments) and realistic with outflows (include irregular expenses like insurance premiums or quarterly taxes). Compare projected balances to your minimum operating reserve to identify potential cash gaps before they become crises.

Worked Example

A small business projects their monthly cash flow:

Beginning cash balance: $25,000

Cash Inflows:
  Customer payments: $45,000
  Interest income: $50
  Total inflows: $45,050

Cash Outflows:
  Payroll: $22,000
  Rent: $3,500
  Suppliers: $12,000
  Utilities: $800
  Insurance: $500
  Loan payment: $1,200
  Taxes (quarterly): $4,500
  Total outflows: $44,500

Net Cash Flow: $45,050 − $44,500 = $550
Ending Cash Balance: $25,000 + $550 = $25,550

Why It Matters

Cash flow is the lifeblood of every business. According to a US Bank study, 82% of small businesses fail due to cash flow problems. Monitoring and projecting cash flow helps you anticipate shortfalls, make informed decisions about spending and investment, ensure you can meet payroll and obligations, and identify the best timing for major purchases.

Practical Tips

✓Maintain at least 3 months of operating expenses as a cash reserve for unexpected downturns.
✓Invoice promptly and follow up on overdue payments—receivables are not cash until collected.
✓Time large expenses (equipment, inventory) to coincide with strong cash inflow periods.
✓Review a 13-week rolling cash flow forecast weekly for the most actionable short-term visibility.

Frequently Asked Questions

What is the difference between cash flow and profit?

Profit is an accounting concept—revenue minus expenses on an accrual basis. Cash flow tracks actual money in and out. You can be profitable but cash-poor if customers owe you money (accounts receivable) or you have prepaid expenses. Conversely, you can have strong cash flow but low profits if you took on debt or received prepayments.

How far ahead should I forecast cash flow?

Most businesses benefit from a 13-week (rolling quarterly) short-term forecast updated weekly, plus an annual forecast updated monthly. The 13-week window provides actionable detail for managing day-to-day cash. The annual forecast helps with strategic planning, hiring, and investment decisions.

What should I do if my cash flow forecast shows a shortfall?

Act immediately: accelerate collections (offer early payment discounts), delay non-essential expenses, negotiate extended payment terms with suppliers, draw on a line of credit, or reduce inventory levels. The earlier you identify a gap, the more options you have to address it.

Skip the Manual Calculations

FiscalInsights automates your financial calculations, tracks your metrics in real time, and gives you actionable insights to grow your business.

Start Free Trial

Learn More About This Topic

Accounting 101 Guide Financial Statements Guide Financial Glossary Free Templates