Cash Flow
Cash flow — not profit — is what keeps a business alive. A company can be profitable on paper and still go bankrupt if it runs out of cash. Our calculator builds a 12-month cash flow projection from your income, expenses, and timing differences (accounts receivable lag, inventory purchases, tax payments), and flags months where you might run short.
Income
Operating Expenses
Monthly Cash Flow
What Is Operating Cash Flow?
Operating cash flow (OCF) is the money your business generates from its core operations — after paying all operating expenses. It's the difference between what comes in from customers and what goes out to keep the business running. Positive OCF means your operations are self-sustaining; negative OCF means you're burning reserves or debt to stay alive.
OCF is often more important than profit for day-to-day survival. A business can show accounting profit but still run out of cash due to timing mismatches — like paying contractors before clients pay invoices. Cash flow is reality; profit is an accounting concept.
Tracking cash flow monthly reveals patterns: seasonal dips, growing expense categories, or revenue concentration risk. These insights let you make proactive decisions — like building a cash reserve before a slow season — instead of reacting to crises.
How to Improve Your Business Cash Flow
The fastest way to improve cash flow is to get paid faster. Offer early payment discounts, shorten your payment terms from Net 30 to Net 15, and require deposits on large projects. Consider using invoicing software that sends automatic reminders on overdue invoices.
On the expense side, audit your recurring software and tool subscriptions quarterly — most businesses are paying for tools they no longer actively use. Negotiate payment terms with vendors to extend them, which gives you more float. Stagger large expenses across months when possible.
The gold standard is building a cash reserve equal to 3–6 months of operating expenses. This buffer lets you weather slow months without stress and gives you leverage to invest in growth opportunities when they arise.
About the Cash Flow Calculator
Cash flow — not profit — is what keeps a business alive. A company can be profitable on paper and still go bankrupt if it runs out of cash. Our calculator builds a 12-month cash flow projection from your income, expenses, and timing differences (accounts receivable lag, inventory purchases, tax payments), and flags months where you might run short.
How to use it
- Enter your monthly revenue and the collection delay (e.g., net-30 invoices mean cash arrives next month).
- Enter fixed monthly expenses (rent, salaries, subscriptions).
- Enter variable costs as a percentage of revenue.
- Add one-time items (equipment, tax payments, loan repayments) in specific months.
Formula & methodology
Operating cash flow = Net income + Non-cash charges (depreciation) − Changes in working capital. Free cash flow = Operating CF − Capital expenditures. Cash position = opening balance + cash in − cash out. Working capital = Current assets − Current liabilities. Cash conversion cycle = DIO + DSO − DPO.
Common use cases
- Startup runway: how many months of cash do you have at current burn rate?
- Small business: identifying seasonal cash crunches before they happen
- Invoice timing: understanding why you can be profitable but cash-poor
- Loan applications: banks require cash flow projections to assess repayment ability
- Investor pitch: demonstrating path to cash flow positive
Frequently asked questions
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