Cash Flow Calculator Small Business
Created by: Daniel Hayes
Last updated:
Calculate comprehensive cash flow projections for your small business including revenue forecasting, expense tracking, cash runway analysis, and multi-month financial projections. Essential for financial planning, loan applications, and business growth decisions.
What is Cash Flow for Small Business?
Cash flow for small business refers to the movement of money in and out of your business over a specific period. It includes all cash receipts from sales, accounts receivable collections, and other income sources, minus all cash payments for expenses, inventory, debt service, and capital expenditures.
Positive cash flow means more money is coming into your business than going out, while negative cash flow indicates the opposite. Understanding and managing cash flow is crucial for small business survival and growth, as it affects your ability to pay bills, invest in opportunities, and weather unexpected challenges.
Cash Flow Calculation Formulas
Operating Cash Flow
Operating Cash Flow = Net Income + Depreciation - Change in Working Capital
Free Cash Flow
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Cash Runway
Cash Runway = Current Cash Balance ÷ Monthly Burn Rate
How to Calculate Small Business Cash Flow: Example
Let's calculate cash flow for a small retail business with the following monthly data:
- Revenue: $25,000
- Operating expenses: $18,000
- Loan payments: $2,000
- Capital purchases: $1,500
- Starting cash: $15,000
Calculations:
- Net Operating Cash Flow = $25,000 - $18,000 = $7,000
- Cash After Debt Service = $7,000 - $2,000 = $5,000
- Free Cash Flow = $5,000 - $1,500 = $3,500
- Ending Cash Balance = $15,000 + $3,500 = $18,500
Common Applications
- Financial Planning: Project future cash needs and identify potential shortfalls
- Loan Applications: Demonstrate financial health to lenders and investors
- Budget Management: Monitor actual vs. projected cash flows
- Investment Decisions: Evaluate capacity for growth investments
- Emergency Planning: Determine cash runway and contingency needs
- Seasonal Planning: Prepare for cyclical business patterns
Frequently Asked Questions
How often should I monitor cash flow?
Small businesses should monitor cash flow weekly or daily, especially during critical periods. Monthly cash flow projections should extend 12 months ahead, with quarterly updates to reflect changing business conditions and seasonal patterns.
What is a healthy cash flow runway?
A healthy cash runway is typically 3-6 months of operating expenses for established businesses, and 6-12 months for startups or businesses in volatile industries. This provides adequate buffer for unexpected expenses or revenue fluctuations.
How can I improve my business cash flow?
Improve cash flow by accelerating receivables collection, negotiating better payment terms with suppliers, managing inventory levels efficiently, reducing unnecessary expenses, and considering invoice factoring or lines of credit for short-term needs.
Sources and References
- Small Business Administration (SBA), "Cash Flow Management Guide", Financial Management Resources
- SCORE, "Small Business Cash Flow Planning", Mentorship and Education Materials