Cash Flow Calculator

Cash flow tracks the actual movement of money in and out of your business, while profit is an accounting concept that shows revenue minus expenses. A business can be profitable on paper but still face cash flow problems if, for example, customers are slow to pay or if large investments are made in inventory or equipment.

For most businesses, monthly cash flow analysis is recommended, with weekly reviews for businesses with tight cash flow or seasonal fluctuations. Startups and businesses experiencing rapid growth or financial challenges should monitor cash flow even more frequently, potentially weekly or daily.

Yes, positive cash flow alone doesn't guarantee long-term success. A business might have temporary positive cash flow but still face long-term profitability issues, market challenges, or strategic problems. Additionally, if a business consistently maintains positive cash flow by delaying necessary investments, it might compromise its competitive position or growth potential over time.

First, determine if the negative cash flow is temporary or indicating a deeper problem. For temporary issues, consider securing short-term financing, negotiating extended payment terms with suppliers, or accelerating customer payments. For systemic problems, develop a comprehensive cash flow improvement plan that might include cutting unnecessary expenses, revising pricing, improving inventory management, or restructuring debt.

Start with your current cash position and project expected inflows and outflows for your desired timeframe (typically 3-12 months). Use historical data, known payment schedules, sales projections, and seasonal patterns to make these estimates. Include fixed costs, variable expenses, and one-time payments. Review and adjust your forecast regularly as new information becomes available. Consider creating multiple scenarios (best-case, expected, worst-case) to prepare for different outcomes.

No, true cash flow analysis should only include actual cash movements. Non-cash expenses like depreciation, amortization, and unrealized gains/losses should be excluded since they don't represent actual cash entering or leaving the business. However, it's important to track these separately for accounting and tax purposes, as they affect your financial statements and tax obligations.