How to forecast cash flow
Profitable businesses go under all the time — not because they aren't profitable, but because they run out of cash at the wrong moment. A cash-flow forecast is how you see that moment coming.
Skip the math — the free startup runway calculator runs this from your own figures.
Open the free calculator →Cash is not profit
Your profit-and-loss statement can show a healthy month while your bank account drains. That's because profit records a sale when it's made, but cash only moves when the money actually arrives — which can be weeks later.
A cash-flow forecast tracks the timing of real money in and out, which is what actually keeps the lights on.
Start from the cash you have today
Every forecast begins with your current bank balance. Each future month is simply: starting cash, plus the money you expect to collect, minus the money you expect to pay out, equals your ending cash — which becomes next month's starting point.
That chain is the whole model. Everything else is just estimating the two middle numbers well.
Project money in — by when it lands
List your expected income, but book it in the month you'll actually be paid, not the month you invoice. If customers pay on 30-day terms, work you deliver in March is cash in April.
This timing shift is exactly what catches growing businesses off guard: sales are up, but the cash hasn't arrived yet.
Project money out — including the lumpy stuff
Payroll, rent, and subscriptions are predictable. The dangerous items are the lumpy ones — a quarterly tax payment, an annual software renewal, a big inventory order. Put them in the specific month they hit, not spread evenly.
A forecast that smooths out lumpy costs will look fine right up until the month one lands.
Read it for the gap
The point of the forecast is to spot the lowest your cash gets, and when. If that number goes negative, you've found a problem while you still have time to fix it — by pulling collections forward, delaying a cost, or raising money.
The free runway calculator below gives you the headline version — how many months your current cash lasts — and a full model handles the month-by-month timing.
Questions
How far ahead should I forecast?
Rolling 12 months is ideal for a small business, updated monthly. Near months should be fairly accurate; later months are rougher estimates you refine as you go.
What's the difference between a cash-flow forecast and a budget?
A budget is a plan for what you intend to earn and spend. A cash-flow forecast adds timing — when that money actually moves — which is what tells you whether you can make payroll in a given week.