Cash Flow Calculator

Cash flow forecasting tracks the actual movement of money in and out of your business on a weekly or monthly basis. The formula is straightforward: Opening balance + Total cash inflows − Total cash outflows = Closing balance. The closing balance of one period becomes the opening balance of the next. Unlike profit, cash flow accounts for the timing of payments—you may invoice £10,000 in March but not receive payment until May.

Cash inflows include customer payments, loan drawdowns, tax refunds, grants, asset sales, and any other money physically entering your bank account. Cash outflows cover supplier payments, wages, rent, utilities, loan repayments, tax payments (VAT, PAYE, Corporation Tax), equipment purchases, and dividend distributions. Categorising each flow allows you to identify which areas consume the most cash.

A negative closing balance signals a shortfall that must be covered by an overdraft, loan, or deferring payments. Projecting 12 months ahead lets you spot potential crises before they happen. Key metrics include the cash burn rate (average monthly outflows minus inflows when negative) and the runway (current balance divided by monthly burn rate), showing how many months the business can survive without additional income.

Cash flow vs profit — the critical distinction. Profit = sales − costs (accounting basis). Cash flow = actual money in vs actual money out (when received/spent). Common situation: profitable business goes bankrupt due to cash flow crisis. Sample: £100k profit on paper, but customers owe £150k (60-day payment terms), supplier needs £80k next week — no cash to pay. UK SME bankruptcy: 80% due to cash flow problems, not profitability. Track cash flow weekly minimum, daily for tight-cash businesses.

Components of UK SME cash flow. Inflows: customer payments (sales), VAT collected (held for HMRC), tax refunds, loans, grants, owner injections. Outflows: payroll (monthly), VAT to HMRC (quarterly), Corporation Tax (9 months after year-end), rent, suppliers, mortgage/loan repayments, software subscriptions, insurance, marketing. UK timing trap: customer paid you for VAT-inclusive invoice, but VAT goes to HMRC end of quarter. Many businesses spend the VAT thinking it's their cash. ALWAYS segregate: pay yourself net of VAT only.

Cash flow forecasting — 13-week rolling. Standard UK SME tool: 13-week (3-month) rolling cash flow forecast. Weekly columns showing: opening cash, expected inflows, expected outflows, closing cash. Rolls forward weekly — gives early warning of shortfalls. Best practice: include conservative customer payment timing (60 days even if invoice says 30). Build buffer for unexpected expenses (5-10% of monthly outflows). Update weekly with actuals. Spreadsheet template free at gov.uk or Xero/QuickBooks built-in.

Common UK cash flow killers. Late customer payments: 56% UK SMEs paid late (FSB 2024). Average UK B2B invoice paid 26 days late. Get tough: state 14-day terms, charge late payment interest (8% above BoE base rate via Late Payment of Commercial Debts Act). VAT shock: collecting VAT for 3 months then paying lumpy amount to HMRC. Tax cash flow: separate bank account for VAT and CT — never touch. Seasonality: Christmas retail boom followed by January slump. Stock buildup: inventory ties up cash without generating revenue until sold.

Improving cash flow — proven tactics. Invoice immediately on delivery (every day's delay is money lost). Offer 1-2% early payment discount for payment within 7 days (often nets better than waiting 60 days). Use Direct Debit (GoCardless, Stripe) for recurring customers — payments automatic. Factor receivables: sell invoices to finance company (typically 80-90% advance, fee 1-5%). Invoice finance via Bibby, Hitachi Capital, Tide. Tax buffer: keep 30% of revenue in separate tax savings account. Suppliers: negotiate longer payment terms (60-90 days) — improves cash flow without hurting profit.