Cash Flow Forecast
Monthly view of cash in and cash out. Includes a running balance with warning threshold alerts.
Published by Blueprint Dynamics. Planning tools, not professional advice. Read the formula, assumptions, and examples below before relying on a result. Independent professional review is not claimed. Learn more about our methodology →
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Simplified management models, not GAAP statements, audited accounts, investment advice or a financing forecast. An accountant must check classifications, periods and reconciliation for formal use.
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About the Cash Flow Forecast
Profit and cash are not the same thing, and the gap between them is where otherwise healthy businesses die. A cash flow forecast tracks the actual dollars moving in and out of your bank account month by month, so you can see the balance you will really have on any given date — not the profit you booked on paper. Plenty of profitable companies have run out of cash because a big customer paid late while payroll came due on time.
This twelve-month forecast starts from an opening balance and rolls a running closing balance forward across the year, adding every source of cash in and subtracting every payment out. That running balance is the number that tells you whether you can make payroll in month seven, cover a tax bill in month nine, or need to arrange financing before a predictable shortfall arrives.
You also set an alert threshold — a minimum cash cushion you never want to fall below. The forecast highlights any month the closing balance dips under it, turning a vague worry into a specific date you can plan around.
Before you enter your numbers
- Start with actual available cash, not a revenue figure. Forecast collection dates for invoices and payment dates for payroll, suppliers, tax, and debt.
- Enter positive amounts in inflow and outflow rows. A loan received increases cash but is not sales revenue; loan principal paid consumes cash but is not normally a P&L expense.
Assumptions and limits
- This is a monthly cash model. It does not automatically import invoice dates, accrue unpaid bills, or reconcile bank statements.
- The warning threshold is a user-selected buffer, not a solvency or lending assessment.
Check your result
Opening cash of $10,000 plus $15,000 received minus $12,000 paid leaves $13,000. The next month must start with $13,000. A profitable unpaid sale cannot be counted as cash collected.
How the Cash Flow Forecast works
You enter an Opening Balance for Month 1 and an alert threshold, then fill two sections: Cash In (default rows Sales and Loans/Investments) and Cash Out (default rows Payroll, Rent, Marketing), each spanning twelve months. The worksheet totals inflows and outflows for every month.
The engine is a running balance. For each month, Closing Balance = prior month's closing balance + total Cash In − total Cash Out, and that closing figure becomes the next month's opening figure. This chaining is what lets a surplus in an early month carry forward to absorb a lean month later, or a shortfall to compound if you ignore it.
Formatting does the warning for you: any closing balance below your threshold but still positive is flagged, and a negative balance shows in red. Note this is a cash forecast, not a profit statement — non-cash items like depreciation never appear, and loan principal, owner draws, and tax payments do appear because they move real cash.
Worked example
With the defaults, the opening balance is $10,000 and the threshold is $5,000. Month 1 Cash In is Sales $15,000 plus a one-time Loans/Investments injection of $50,000 = $65,000. Cash Out is Payroll $8,000 + Rent $2,000 + Marketing $1,000 = $11,000. So Month 1 closing balance = $10,000 + $65,000 − $11,000 = $64,000.
From Month 2 onward there is no loan injection, so monthly Cash In is just $15,000 while Cash Out stays $11,000 — a net gain of $4,000 each month. The balance therefore climbs to $68,000 in Month 2, $72,000 in Month 3, and so on, ending the year around $108,000. Now change one input: drop Sales to $8,000 a month and the net turns to −$3,000, so the balance falls steadily and you can read the exact month it would cross the $5,000 threshold and demand action.
Tips & common mistakes
- Forecast the timing of cash, not the timing of invoices. If customers typically pay 30 to 45 days after you bill them, record that revenue as cash in the month it actually lands, or your forecast will be dangerously optimistic.
- Include the lumpy, easy-to-forget outflows: quarterly taxes, annual insurance premiums, loan principal repayments, and owner draws all drain cash even though some never touch a P&L.
- Set the alert threshold to cover at least your biggest single recurring outflow — usually payroll — so a flagged month gives you real lead time to react.
- Build a conservative and an optimistic version by adjusting the Sales row; the spread between the two closing-balance lines is your true risk range.
- Update the opening balance with your real bank figure at the start of each month so the running forecast stays anchored to reality rather than drifting.
Cash Flow Forecast: frequently asked questions
How is cash flow different from profit?
Profit is revenue minus expenses regardless of when money moves; cash flow tracks the actual dollars entering and leaving your account by date. You can be profitable on paper yet unable to pay bills because customers have not paid you yet — which is exactly the gap this forecast reveals.
What does the alert threshold do?
It marks the minimum balance you want to keep on hand. Any month whose closing balance falls below it gets highlighted, so you see well in advance which month is at risk and can arrange a credit line, chase receivables, or cut spending before the shortfall hits.
How does the running balance carry forward?
Each month's closing balance equals the previous closing balance plus that month's inflows minus its outflows, and it becomes the next month's opening balance. That chaining is why a strong month cushions a weak one and why an early shortfall compounds if left unaddressed.
Should loan proceeds and repayments go in here?
Yes. A loan you receive is real cash in, and the principal you repay is real cash out, so both belong in the forecast even though the principal never appears on a profit and loss statement. Interest goes in Cash Out too.
Do I include non-cash costs like depreciation?
No. Depreciation and amortization never move cash, so they are excluded from a cash flow forecast. Only enter items that actually add to or subtract from your bank balance.
Use the result in your next decision
- Profit & Loss Statement (Monthly): Compare cash timing with accounting profitability.
- Startup Cost Estimator: Budget launch bills before entering the remaining cash balance.
Sources and further reading
These references explain the specified topic; they are not endorsements or evidence that a professional has reviewed this tool.
- SEC: Beginners' guide to financial statements — Explains the differences between cash flow, income statements, and balance sheets.