Guide · free template
Cash flow forecast,from the cash you actually have.
What a cash flow forecast is, how it differs from a profit forecast, the five steps to build one, a twelve-month example computed by a real model engine, and a CSV template to start from.
Definition
What a cash flow forecast is
A cash flow forecast estimates the cash balance at the end of each future month: the balance you start with, plus everything that will be collected, minus everything that will be paid. It is the answer to the only question that closes a company: will there be money in the bank on payday?
It is not the P&L. Profit records revenue when it is earned and costs when they are incurred; cash records when money moves. A company can be profitable on paper in a month it cannot pay salaries (invoices out on 45-day terms, a tax bill due, stock bought ahead of the season) and loss-making in a month it collects a year of subscriptions in advance.
How to
Build a cash flow forecast in five steps
- Start from the bank. The real balance across every account you would spend from, today. Not the number in last quarter's deck.
- Cash in, by collection date. Subscriptions on their billing day; invoices on their due date plus the days customers actually take; annual plans in the month they are paid. If you have a revenue forecast, apply your collection terms to it.
- Cash out, by payment date. Payroll including employer taxes, on the day it runs. Rent, tools, contractors. The annual insurance premium in the month it falls. Hires on their start date, not on the day you decided to hire.
- Financing and investing. A round in the month it closes, a loan drawdown, repayments, equipment purchases.
- Roll it forward, then check it monthly. Each month's ending balance opens the next. When the real month ends, replace the forecast with what happened and re-run the rest.
The result is a line, not a number: the month the balance is lowest is the one that matters, and runway is where that line crosses zero.
Example
Twelve months for Northwind Analytics
A seed-stage SaaS company: $900k in the bank, 6 people on payroll, 120 customers at $180 a month growing by 25 a month with 3% churn, invoices collected in 30 days and annual plans prepaid. Cash from operations is net income adjusted for depreciation and working capital; every figure is computed by the model engine, and the same model's P&L and balance sheet are on the three-statement guide.
| M1 | M2 | M3 | M4 | M5 | M6 | M7 | M8 | M9 | M10 | M11 | M12 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening cash | 900,000 | 831,904 | 781,938 | 734,738 | 690,219 | 648,302 | 608,909 | 571,963 | 537,392 | 505,124 | 475,090 | 447,223 |
| Cash from operations | (53,096) | (49,966) | (47,201) | (44,519) | (41,917) | (39,393) | (36,946) | (34,571) | (32,268) | (30,034) | (27,867) | (25,765) |
| Capital spending | 15,000 | – | – | – | – | – | – | – | – | – | – | – |
| Financing | – | – | – | – | – | – | – | – | – | – | – | – |
| Net change | (68,096) | (49,966) | (47,201) | (44,519) | (41,917) | (39,393) | (36,946) | (34,571) | (32,268) | (30,034) | (27,867) | (25,765) |
| Ending cash | 831,904 | 781,938 | 734,738 | 690,219 | 648,302 | 608,909 | 571,963 | 537,392 | 505,124 | 475,090 | 447,223 | 421,458 |
| Net burn | 57,438 | 54,449 | 51,550 | 48,737 | 46,009 | 43,363 | 40,796 | 38,306 | 35,891 | 33,548 | 31,276 | 29,071 |
The balance falls every month (this company is burning about $42,536 a month) and the lowest point inside the horizon is $421,458, in month 12. Burn shrinks as revenue grows, so runway on the curve is longer than cash divided by month-one burn: 21.9 months, extrapolated past the twelve months shown.
The CSV template has the same rows with these figures filled in as a sample; replace them with yours, or open the workspace and let the connectors fill them.
Pitfalls
Five things that make cash flow forecasts wrong
- Booked instead of collected. Revenue on the P&L is not cash until the customer pays. Apply your real days-to-collect.
- Payroll without the employer's share. Taxes, benefits and contributions add 10–30% to salaries depending on where you are.
- Annual bills spread evenly. Insurance, software renewals and tax payments land in one month. Put them there.
- Hires on decision date. Someone who starts in March costs nothing in January. The reverse mistake, forgetting the agreed hire, is worse.
- A stale opening balance. Every forecast is only as good as the balance it starts from. Read it from the bank, not from memory.
In the workspace
A forecast that starts from real balances
Replafin connects to Stripe, Mercury, Brex, most U.S. banks through Plaid, QuickBooks Online, Xero and Otto HR, and accepts a CSV for anything else. The opening balance is read, not typed; transactions are categorised and reconciled against the books; the forecast is rebuilt from payroll roles and their dates, churn, collection terms and one-off items. Burn and runway come from the resulting curve, and the balance sheet still balances every month.
Questions
Cash flow forecasting, answered
What is cash flow forecasting?
Estimating how much cash will be in the bank at the end of each future period, by projecting what will come in and what will go out. It differs from a profit forecast because it uses the dates money actually moves: an invoice paid in 45 days, an annual plan paid up front, a tax bill that lands in one month.
How do you forecast cash flow?
Start from the real bank balance. List cash coming in by when it is collected, not when it is earned. List cash going out by when it is paid: payroll on its date, rent, tools, taxes, one-off purchases. Add financing: a round, a loan, repayments. Roll the balance forward month by month. Then refresh it every month against the bank.
What is the difference between a cash flow forecast and a cash flow projection?
In practice they are used interchangeably. Some people use “forecast” for the near term built from known items and “projection” for a longer horizon built from assumptions. The mechanics are the same.
Direct or indirect method?
The direct method lists receipts and payments; the indirect method starts from net income and adjusts for non-cash items and working capital. A short-term treasury forecast is usually direct. A model that also produces a P&L and balance sheet uses the indirect method, because that is what ties the three statements together.
How often should a startup update its cash flow forecast?
Monthly at minimum, against the actual bank balance, and whenever something big changes: a hire, a lost customer, a round closing. A forecast that starts from a balance nobody has checked since the last board meeting is a guess.
Forecast the bank balance.Not the wish.
Connect a bank or type an opening balance, add the roles you pay, and see twelve months of cash, with burn and runway on the dashboard. Plans from $200 a month.