Project your business cash flow for 12 months. Enter monthly revenue, cost of goods and fixed overheads to see opening and closing cash balances each month — and spot cash crunches before they happen.
| Month | Revenue | Costs | Net | Closing Balance |
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Cash flow and profit are not the same thing. A business can show a healthy profit on its income statement while running out of cash in its bank account — and that is when companies fail. The gap between invoicing and receiving payment, seasonal revenue fluctuations, and the timing of supplier payments all create cash flow patterns that can sink profitable businesses. This tool projects that timing explicitly.
If you invoice £20,000 in January on 30-day payment terms, that cash arrives in February. But your January rent, salaries and supplier invoices are due in January. You are £20,000 profitable but potentially cash-flow negative in January. This timing mismatch is the most common cause of business cash crises — even in growing, profitable businesses.
Standard B2B payment terms in the UK are 30 days. Larger companies often impose 60 or 90 days. Government contracts sometimes pay in 90+ days. If your revenue grows from £10,000 to £30,000 in 3 months but clients pay 60 days later, you can face a significant cash shortfall during your fastest growth period. Growth kills cash-flow-poor businesses.
Key tactics: (1) Invoice immediately and follow up at 30 days; (2) Negotiate shorter payment terms with customers; (3) Use invoice financing or factoring for large outstanding invoices; (4) Align supplier payment terms with customer payment receipt; (5) Maintain a minimum cash buffer of 3 months fixed costs; (6) Build a revolving credit facility before you need it.
Start with opening cash balance. Each month: add cash actually received (not invoiced — actual receipts based on payment terms), subtract cost of goods sold paid to suppliers and subtract fixed operating costs paid. The result is your closing cash balance — which becomes the next month's opening balance. Our tool automates this with payment delay modelling.
The four main causes: (1) Long payment terms — invoicing and receiving payment weeks or months apart; (2) Rapid growth — hiring and investing before revenue arrives; (3) Seasonality — revenue concentrated in certain months while costs are spread evenly; (4) Poor debtor management — invoices unpaid beyond terms. All four can coexist in profitable businesses.
Most advisers recommend keeping a minimum of 3 months of total operating costs in accessible cash or credit facility. A business with £8,000/month costs should maintain £24,000+ buffer. Higher-risk businesses (project-based revenue, long payment terms, seasonal) should maintain 6 months. The buffer is not profit — it is an operational reserve that prevents profitable businesses from failing due to timing.