Cash Flow Calculator

Cash flow vs profit — they are not the same

A business can be profitable on paper and still run out of cash. Profit is an accounting concept: revenue minus expenses, including non-cash items like depreciation. Cash flow is what actually moves through the bank account: cash in minus cash out. Small businesses die from cash flow, not profitability — you can have a 20% net margin and zero cash because customers pay slowly, inventory ties up money, and big quarterly tax payments hit at bad times.

The cash flow projector above is deliberately simplified. It treats revenue as cash collected and expenses as cash paid in the same month. That makes it perfect for planning — and if you need a full accrual vs cash reconciliation, that's a job for your bookkeeping software, not a one-page calculator.

How to use this calculator

1. Starting cash: the balance in your business checking account today.
2. Revenue (Month 1): realistic estimate of cash collected next month, not invoiced.
3. Growth % per month: how fast you expect revenue to grow. 2%/mo is 27%/yr. Most small businesses overestimate — use last 6 months' actual growth as a floor.
4. Expense categories: COGS grows with revenue; payroll, rent, marketing, and other are held flat unless you bake in increases.

The chart shows what the cash balance looks like over the next 12 months. If the line goes below zero, you need a plan — raise prices, cut expenses, accelerate collections, or raise capital before it becomes urgent.

The four levers of cash flow

• Revenue timing. Faster collections — deposits, shorter invoice terms, autopay — improve cash flow without changing profit.
• Revenue volume. Selling more, obviously.
• Expense timing. Negotiating Net-60 with suppliers while staying Net-15 with customers is the gold standard. You effectively finance operations with supplier credit.
• Expense volume. Cutting unnecessary subscriptions, right-sizing headcount, reducing waste.

Of the four, timing levers (1 and 3) are the fastest to move and most underused. A business with identical P&L but tighter receivables can have twice the cash on hand. Most owners obsess over revenue volume and ignore receivables timing — wrong priority for a cash-constrained business.

Seasonal businesses need rolling forecasts

If your business has a strong seasonal pattern — retail in Q4, landscaping in spring, accounting in tax season — a flat monthly projection understates cash swings. Build a seasonal adjustment by dropping revenue in low months and boosting it in peak months. For seasonal businesses, treat this calculator's output as a smoothed-average view and do a more detailed spreadsheet quarterly with monthly-granular inputs. A ski shop that averages $20K/month is actually $60K in Dec, $40K in Jan, $5K in July — averaging hides the July cash crunch.

Accounts receivable drag

The single largest cash flow gap in service businesses is between invoice date and payment date. If you invoice $30,000/month on Net 30, you always have roughly a month of receivables outstanding — $30,000 of earned revenue sitting on client desks instead of in your bank. Shortening terms to Net 15, offering a 2% discount for paying within 10 days, or collecting deposits on project start can all compress that gap. Our DSO calculator benchmarks how fast you're actually collecting.

When ending cash goes negative

If the projection shows you running out of cash in month 7, that's your signal to act now — not month 6. Options in rough order of preference:

1. Collect outstanding invoices. Fastest cash source is usually already owed to you. Call every account over 30 days past due today.
2. Cut controllable expenses. Pause hiring, reduce marketing spend, negotiate rent concessions. Software subscriptions first — most businesses find 5–15% of opex is pure waste.
3. Raise prices. Even a 5% price increase on existing customers can close the gap without hurting volume meaningfully.
4. Sell in advance. Annual plans (often with 10% discount), retainers, deposits on project start.
5. Open a line of credit. Banks will lend money when you don't need it. Apply before the crisis — having an unused $100K line is an insurance policy.
6. Term loan. Our business loan calculator shows what monthly payments will do to the projection. Make sure DSCR works before signing.

Monthly review cadence

Update the cash flow projection on the first of every month. Replace last month's projected revenue and expenses with actuals, and re-run the next 12 months. This rolling 12-month model is the foundation of small-business financial planning, far more useful than the annual budget most owners build once and never touch. Fifteen minutes a month saves you from cash surprises — cheaper than any other habit in business.

Linking cash flow to strategy

Cash flow is not just operations — it reflects strategy. A growth-stage business will show negative monthly cash flow because it's reinvesting in marketing and headcount. A mature profitable business should throw off cash. If your projection shows negative cash flow and you're not in growth mode, something is broken in unit economics. Pair the cash flow calculator with the profit margin calculator and the runway calculator to see the full picture.

Operating cash flow vs free cash flow

For most small businesses, numbers above approximate operating cash flow — cash produced by day-to-day operations. Free cash flow subtracts capital expenditures (new equipment, major software, renovations). If you're planning large capex in the next year, add it as a one-time expense to a specific month rather than smearing across the projection. Capex timing has a huge cash flow impact and should be visible, not buried in "other expenses." See our working capital calculator for the operational-liquidity angle lenders care about.