Cash Flow Forecast Calculator

Build your forecast with the calculator above

Use the calculator above to map your cash position month by month. Start with the cash you actually hold today, add the realistic money coming in, subtract everything going out, and the tool carries each month's closing balance into the next as the new opening balance. Within a minute you will see whether your business cash flow projection stays in the black all year or dips into the red.

How a cash flow forecast actually works

A cash flow forecast tracks money, not profit. It ignores when you raised an invoice or booked a sale and instead follows when the cash genuinely lands in or leaves your bank account. That distinction is the whole point: a profitable business can still run out of money if customers pay late and bills fall due first.

The maths behind every row is deliberately simple:

Closing balance = Opening balance + Cash in − Cash out

Then the closing balance becomes the opening balance for the following month, and the chain continues. Spread across twelve columns, that single line turns into a 12 month cash flow forecast that exposes the squeeze points.

Cash in means money that truly arrives: customer payments (on the date they pay, not the invoice date), a director's loan paid in, a grant, a tax refund, or new finance drawn down. Cash out means money that truly leaves: supplier payments, wages and PAYE, rent, software subscriptions, your own drawings, loan repayments, and the big lumpy ones people forget — VAT, Corporation Tax and Self Assessment payments on account.

Because the calculator works on timing, a £6,000 invoice raised in March but paid in May only shows as cash in for May. Get that timing right and the forecast earns its keep. Get it wrong — assuming everyone pays on the dot — and it flatters you into a false sense of security.

Worked example: a freelance designer's 12 month view

Take Priya, a sole trader designer. She starts April with £3,200 in the business account. She invoices roughly £5,000 a month on 30 day terms, but in practice clients pay the month after, so April's work becomes cash in May. Her fixed outgoings — software, accountant, phone, drawings — come to £3,800 a month.

• April: opening £3,200, cash in £0 (March work paid late), cash out £3,800 → closing −£600.
• May: opening −£600, cash in £5,000, cash out £3,800 → closing £600.
• June: opening £600, cash in £5,000, cash out £3,800 → closing £1,800.
• July: opening £1,800, cash in £5,000, cash out £3,800, plus a £2,400 Self Assessment payment on account → closing £600.

Two things jump out. First, April dips below zero purely because of payment timing — the work was done, the cash had not arrived. Second, July looks healthy until the tax bill lands. Without a forecast, that £2,400 hit in July would be a nasty surprise. With one, Priya knows by April that she needs an overdraft buffer or has to chase invoices harder in early spring. You can size that future tax bill with the self-employed tax calculator and the payments on account calculator, then drop the figures straight into your forecast.

Worked example: a small limited company and its VAT quarter

Now take a VAT-registered limited company turning over about £18,000 a month. It opens October with £9,000. Sales come in fairly evenly, but VAT is collected on behalf of HMRC and paid quarterly — so the bank balance looks fatter than it really is until the VAT payment falls due.

• October: opening £9,000, cash in £18,000, cash out £14,500 → closing £12,500.
• November: opening £12,500, cash in £18,000, cash out £14,500 → closing £16,000.
• December: opening £16,000, cash in £15,000 (festive slowdown), cash out £14,500, plus a £7,200 VAT payment → closing £9,300.

The VAT collected over the quarter was never the company's money to spend. Treating it as spare cash in October and November is how businesses get caught short in December. A forecast that schedules the VAT bill in the right month keeps that money mentally ring-fenced. To estimate the figure, the VAT return calculator shows what you are likely to owe each quarter.

What to feed into the forecast for accuracy

A forecast is only as honest as its inputs. Build it from real data, not hope:

• Use paid dates, not invoice dates. If a client routinely pays 45 days late, model 45 days. An invoice generator with clear terms helps, but forecast the behaviour you actually see.
• Schedule the lumpy bills. VAT (quarterly), Corporation Tax (nine months and one day after year end), Self Assessment (31 January and 31 July), insurance renewals and annual subscriptions all belong in specific months.
• Separate drawings and salary. Money you take out is cash out, even though it is not a business cost in the profit sense.
• Add a contingency line. A modest buffer for the unexpected stops a single late payment from tipping you into the red.

If you want to understand the difference between cash and profit more deeply, pair this with the profit and loss calculator and check the volume of sales you need to cover costs using the break-even calculator.

Reading the result: what a negative month is telling you

A red month is not automatically a crisis — it is a heads-up with weeks or months of warning. When the closing balance dips below zero, you have a handful of levers: bring cash in sooner (deposits, faster invoicing, shorter payment terms), push cash out later (negotiate supplier dates, spread an annual bill monthly), arrange a buffer (an agreed overdraft or a short-term facility), or cut discretionary spend in the lean months. The earlier the forecast flags the gap, the cheaper and calmer the fix. Reacting in the month it happens usually means expensive borrowing or a missed tax deadline.

Late-paying customers are the most common cause of UK cash gaps. You are entitled to charge statutory interest and a fixed recovery sum on overdue commercial invoices; the late payment interest calculator shows how much, and gov.uk explains your rights in full at late commercial payments.

Common mistakes that wreck a forecast

• Confusing profit with cash. A bumper sales month can still produce a negative cash month if the money has not landed yet. Forecast the bank balance, not the P&L.
• Forgetting the tax wall. VAT and tax bills are the classic trip-ups because they are large, irregular and easy to spend by accident. Ring-fence them.
• Being optimistic on payment dates. Assuming everyone pays on time is the single biggest forecasting error. Model your real collection pattern.
• Never updating it. A forecast written in January and ignored is a guess. Compare actuals to forecast monthly and roll it forward.
• Leaving out drawings. The money you live on is real cash out. Omitting it makes the forecast look healthier than your bank account ever will.

Keeping it current and useful

The best forecast is a living one. At the end of each month, replace the estimate with what actually happened, then extend a fresh month onto the end so you always look twelve months ahead. This rolling approach catches problems while you still have room to act. For day-to-day spending control alongside the forecast, a simple budget calculator helps you set and hold monthly limits. The Money Helper service also has practical, impartial guidance for small businesses managing cash at moneyhelper.org.uk.

These figures are estimates for guidance only and not personal tax or financial advice. For decisions with real consequences, check the position with a qualified accountant or adviser.