Cash Flow Calculator

Cash Flow Calculator

When running a business, it's important to keep a delicate balance of the money flowing in and out of your company. This is referred to as cash flow. You should think of cash flow as the gasoline that keeps your business engine running. You must circulate enough capital to keep your operations going and avoid failure. Thus, managing cash flow is directly tied to your future success. By adding the details of your finances to the calculator, you can quickly find out where your company stands.

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Why is cash flow important?
Lack of cash is one of the biggest reasons small businesses fail. Cash flow is an important factor in the growth of a business and can move through the company in many ways. Cash flows in from clients or customers that are purchasing products or services. Cash flows out of business for expenses such as manufacturing and loan payments.
By assessing your cash flow you can gauge your ability to meet your financing obligations. This means covering inventory costs, rent, and staff payroll as well as measuring business sustainability. This calculator can be a great tool to improve future money streams when used to identify areas of excessive spending.
How often should you check your cash flow?
The best way to keep track of cash flow in your business is to run regular cash flow reports. It is important to update cash flow as things happen in the business. This can include something as simple as receiving a cheque or sending out an invoice. Often, it’s best to make daily revisions if your business generates or consumes a lot of capital.
Cash flow reviews should typically be done each week. It is best to reconcile your ledger (and memory) over a shorter time period to avoid mistakes. Plus, the more regularly your review your finances, the easier it will be to catch something out of place. You may notice that certain accounts become past due time and time again. Then, you can devise a plan to avoid these recurring late payments.
It is also recommended to do a comprehensive review of your companies finances at the end of every month. It’s an added bonus if you can get your partner and directors to sit in on the meeting. Even if you have been updating cash flow weekly, monthly reviews help to illustrate your overall position. You can better identify any up or downward trends, and make the necessary adjustments to correct or prepare for them.
Why use this calculator?
The cash flow calculator is fairly simple to use. It does require comprehensive knowledge of your business finances. Most of this information should be accessible through your business account but may require some time to sort through properly.
The system will generate the cash available from the beginning of the period in comparison to the cash available at the end of the period. This should help you determine if your company is in a positive or negative cash flow situation, or if a potential business venture will be lucrative.
How to use the calculator
The cash flow calculator has two parts: an information intake and a results section. Within the information intake is four subsections; cash at beginning of period, cash flow from operations, cash flow from investments, and cash flow from financing. If a question or variable does not apply to your situation it may be left blank. It will not affect the accuracy of the calculations.
Cash at beginning of period
Step 1 : On the first line of the calculator you may add the total available cash at the beginning of the period. This is the money currently in your business account.
Cash flow from operations
Step 2 : On the first line of this subsection you should add revenue received from customers. This amount should be based on total receipts, not just sales and accounts receivable. An increase in your accounts receivable may increase your profit on paper but is not an accurate measure of cash flow.
Step 3 : Any other cash receipts should be added to the second line in this subsection.
Step 4 : Include your total payments for inventory on the third line, which should again be based on paid receipts not accounts payable.
Step 5 : Finally, include any payments towards insurance , rent and lease, and advertising. Also include your payroll, interest, taxes, and any other payments as applicable from lines four to ten.
Cash flow from investments
Step 6 : In this area you can document any profits from property sales or investment sales. This can include revenue from stocks or bonds of other companies. It can also entail any other investment activity resulting in profits on line three.
Step 7 : Next you should add any land or equipment purchases to capital expenditure on line four. Also add any cash used for purchases of investment holdings on line five. Exclude any stock buy back and debt retirement, as they are included in the next section.
Cash flow from financing
Step 8 : In the first line of this next subsection you can add any increases in lines of credit or new borrowing funds.
Step 9 : Then on the next line include any net profits from stock issuing (the profit after any fees).
Step 10 : Finally, you should add any cash received from capital contributions and money used for loan repayments. Cash dividends or distributions paid out this period can be included on lines three to six.
Your cash flow results
Once your information is added to the cash flow calculator you can view your results. They will be divided onto graphs and information summaries based on your inputs.
cashflow breakdown
To the right of the inputs you will see the money from your operations, investments, and financing. With these prompts, you can pinpoint the areas of your business resulting in the greatest profits and expenses. This can be helpful in identifying areas of overspending. Using these figures you can structure future money streams.
cashflow calculator
Then, below the information inputs you will be provided with a bar graph. This graph highlights your cash available at the beginning of the period in green, and your cash available at the end of the period in blue. The dollar values are clearly labeled in each instance. This provides a simplified view of the profits and viability of the business through this comparison. No company is without debts and payments, but a successful company should show positive or neutral cash flow.
Remember to bookmark the cash flow calculator and save it to the home screen of your smartphone or tablet. You can return regularly to check up on your expense management. If you sign you can receive member benefits and use our calculator widgets on your website.