Cash is king—a profitable business can fail if it runs out of cash. This calculator helps you track money coming in and going out, ensuring you always know your cash position and can plan for shortfalls before they become crises.
How This Calculator Works
This calculator provides comprehensive cash flow analysis:
- Cash Inflows: All money coming in (sales, investments, loans, etc.)
- Cash Outflows: All money going out (expenses, purchases, debt payments)
- Net Cash Flow: The difference between inflows and outflows
- Cash Position: Running balance showing your cash at any point
The Formula Explained
Net Cash Flow = Total Inflows - Total Outflows
Ending Cash = Beginning Cash + Net Cash Flow
Positive cash flow means more money in than out. Negative cash flow depletes your reserves.
Important: Profit ≠Cash. You can be profitable but cash-poor if revenue is tied up in receivables.
Step-by-Step Example
Small Business Monthly Cash Flow
| Category | Amount |
| Inflows | |
| Sales Collected | $45,000 |
| New Customer Deposits | $5,000 |
| Total Inflows | $50,000 |
| Outflows | |
| Rent | -$4,000 |
| Payroll | -$25,000 |
| Inventory | -$12,000 |
| Utilities | -$800 |
| Loan Payment | -$2,000 |
| Total Outflows | -$43,800 |
| Net Cash Flow | +$6,200 |
Starting cash: $15,000 | Ending cash: $21,200
Frequently Asked Questions
What is cash flow and why does it matter?
Cash flow measures actual money movement in and out of your accounts. Profit looks at revenue and expenses (including non-cash items like depreciation); cash flow tracks when money actually moves. You pay bills with cash, not profits. Many profitable businesses fail due to cash flow problems.
What's the difference between profit and cash flow?
Profit = Revenue - Expenses (accounting basis, includes non-cash items) Cash Flow = Cash In - Cash Out (actual money movement)
You might book a $10,000 sale (profit) but if the customer pays in 60 days, you have zero cash flow today. Conversely, depreciation expense reduces profit but doesn't spend any cash.
What are the three types of cash flow?
Operating Cash Flow: From core business activities (sales, expenses). Investing Cash Flow: From buying/selling assets and investments. Financing Cash Flow: From loans, debt payments, and equity transactions. Total cash flow is the sum of all three.
What is a good cash flow ratio?
Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities. A ratio above 1.0 means you generate enough cash to cover short-term obligations. Above 1.5 is healthy. Below 1.0 signals potential cash problems. This varies by industry—stable businesses can operate at lower ratios.
How can I improve my cash flow?
Strategies include: (1) Invoice faster and follow up on receivables, (2) Negotiate longer payment terms with suppliers, (3) Reduce inventory to free up cash, (4) Offer early payment discounts, (5) Build a cash reserve during good months, (6) Delay non-essential purchases.
How far ahead should I forecast cash flow?
Most businesses should forecast 13 weeks (rolling quarter) for operational planning and 12 months for strategic planning. Update weekly. Seasonal businesses need full-year views. Longer forecasts become less accurate but help identify major future needs.
What causes cash flow problems?
Common causes: (1) Rapid growth (more inventory and receivables needed), (2) Slow-paying customers, (3) Seasonal revenue with constant expenses, (4) Large capital purchases, (5) Unexpected expenses, (6) Poor planning. Even successful businesses can experience cash crunches during growth.
Should I use cash or accrual accounting for cash flow?
Cash flow statements reconcile accrual accounting to cash basis. Most businesses use accrual accounting (recording when earned/owed) for official books but need cash flow analysis for actual money management. The cash flow statement bridges the gap between profit (accrual) and cash (reality).
Key Points to Remember
- Cash ≠Profit: You can be profitable and still run out of cash
- Timing matters: When money moves is as important as how much
- Forecast regularly: Update cash projections weekly or monthly
- Build reserves: 3-6 months operating expenses as buffer
- Act early: Address potential shortfalls before cash runs out