Cash-flow forecast calculator
Closing balance, end of April
£1,800
The balance goes below zero in January, February, March.
- Lowest closing balance
- −£2,100 (February)
- Total net cash flow
- £1,000
- Overdraft needed
- £2,100
- Closing balance
- Zero
| Month | Cash in | Cash out | Net cash flow | Opening | Closing |
|---|---|---|---|---|---|
| January | £8,000 | £9,000 | −£1,000 | £800 | −£200 |
| February | £7,200 | £9,100 | −£1,900 | −£200 | −£2,100 |
| March | £9,400 | £8,000 | £1,400 | −£2,100 | −£700 |
| April | £10,500 | £8,000 | £2,500 | −£700 | £1,800 |
Working
- January: net cash flow = cash inflows − cash outflows = £8,000 − £9,000 = −£1,000.
- January: closing balance = opening balance + net cash flow = £800 + (−£1,000) = −£200.
- February opens with January's closing balance, −£200, and so on to April.
- The lowest closing balance is −£2,100 in February: the business needs an overdraft or other finance of at least £2,100 to get through it.
Your result
£1,800. The balance goes below zero in January, February, March. The lowest point is −£2,100 in February, so arrange at least £2,100 of overdraft or other finance before then.
Learn cash flow step by step
Your mock plan, in three taps
In a cash-flow forecast the closing balance is the opening balance plus net cash flow: £800 at the start and £1,000 more going out than in leaves −£200.
Questions people ask
How do you calculate net cash flow?
Net cash flow = cash inflows − cash outflows for the period. A month with £8,000 coming in and £9,000 going out has a net cash flow of −£1,000.
How do you work out the closing balance?
Closing balance = opening balance + net cash flow, and each month's opening balance is the previous month's closing balance. An £800 opening balance plus a net cash flow of −£1,000 closes at −£200, which becomes the next month's opening balance.
What is the difference between cash and profit?
Profit is revenue minus costs over a period; cash is the money in the bank at a moment. A business that sells on credit can make a profit and still run out of cash while it waits to be paid.
What can a business do about a negative closing balance?
Arrange an overdraft or short-term loan before the month it is needed, ask customers to pay sooner, ask suppliers for longer to pay, delay spending or sell spare stock. The forecast shows how much is needed and when.
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How we work this out
What it does
Enter the opening balance and each month's cash in and out to build the forecast: net cash flow, opening and closing balances and the lowest point.
A cash-flow forecast of up to 12 months, set out the way GCSE Business sets it out (Edexcel 1BS0 Appendix 3; AQA 8132 3.6.2): inflows, outflows, net cash flow, opening and closing balances.
Method
- Net cash flow = cash inflows − cash outflows for each month.
- Closing balance = opening balance + net cash flow.
- Each month's opening balance is the previous month's closing balance.
- The lowest closing balance shows how much overdraft or other finance the business needs, and when.