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Cash Flow Calculator

Updated Jan 03, 2024

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Even the most profitable companies struggle if customers don’t pay them fast enough. Poor cash flow management is the No. 1 reason why most U.S. businesses fail. Use this calculator to check the health of your company cash flow and decide whether you need to take action.

Key terms when using the cash flow calculator

Capital contributions

This is the total cash transferred from shareholders or investors into your business. These payments are classified as capital contributions. Capital contributions are often used to raise money for an expansion or working capital during a downturn. For accounting purposes, contributed capital is added to the shareholder equity section of your company balance sheet.

Capital expenditures

Capital expenditures (CapEx) are longer-term investments made by a business to improve its future cash flows, performance, capacity or profitability.

Examples of CapEx items include acquiring commercial premises to run your business from or investing in new machinery and equipment to increase the volume of products you can manufacture. CapEx items are not regular operational expenses.

Cash at beginning of period

This is how much cash you have in your business at the start of the period you’re measuring.

Cash at end of period

This is the amount of cash you have in your business at the end of your monitoring period. You have positive cash flow if your available cash is higher than it was at the beginning of the period. If you have less available cash, you have negative cash flow.

Dividends paid

Cash dividends are payments made to shareholders from company profits. You may pay less tax on dividends than you do on a salary, but speak to an accountant before committing to a course of action.

For insurance

This is the total cost of all the insurance policies your business has paid for, such as property insurance and liability coverage.

For inventory

This is the total cash you’ve spent on buying inventory during the time period you are analyzing.

For payroll

Add up all the cash paid out by your company to cover payroll and employment taxes. For many companies, wages are one of the most significant factors affecting cash flow.

Interest paid

Calculate your total interest expenses for the time period you’re analyzing on items like business loans, leases and commercial mortgages.

Loan repayments

Work out how much all loan repayments have cost you for the period you’re analyzing. However, don’t include interest payments; they’re covered by the “Interest paid” variable on the calculator.

Loan repayments also include lease payments, credit card payments and any other form of credit borrowing.

New borrowing

Record how much cash has come into the business through new loans or credit lines. Remember to take into account any repayments made on those facilities in the time period you’re analyzing. You should also include any extensions to existing loans or credit lines.

Other activity

This is the total of all cash received from business investments, such as stock dividends, rent payments, interest on bonds and savings accounts, and intellectual property royalties.

Other cash receipts

Calculate how much you’ve received from activities that are either returns from your investments or income from non-core activities.

Other distributions

Other distributions include money spent on activities such as retiring debt and stock buybacks. Debt retirement is when you settle a loan in full before it’s due. These transactions often involve a lot of money, and they have a significant impact on your cash flow.

Other payments

This is the sum of all the payments your business has made to meet expenses that don’t fit into the other categories, such as the purchase of office furniture and suppliers, payments to couriers and postage charges. You should include those costs, including one-time expenses, that don’t easily fit into any other categories.

Other use

“Other use” refers to cash you’ve spent on investments not covered by the “Other activity” field.

Purchases

Here, purchases refers to money spent on external investments, such as stocks, bonds and buying other businesses.

Received from customers

This is the total cash paid to your company by customers in the time period being analyzed. It doesn’t include invoices you’ve issued where payment has not yet been received.

Sale

This refers to the total sum of cash you’ve collected from the sale of investments. This includes the sale of bonds, stock and shareholdings in other businesses.

Sale of property

These are the proceeds from the sale of company assets. This can include intellectual property, patents and real estate.

Stock issuing

If you create new shares in your business and sell them or sell existing ones to a third party, this is how much your company receives from the transactions minus any fees.

What does a cash flow calculation take into account?

Cash flow is how money moves in and out of your business. Net cash flow is the difference between the money you earn and the money you spend making that money.

Cash flow calculations take into account:

  • Money received from customers, interest on savings and interest from investments
  • Money spent on inventory, wages, CapEx, loan payments and more

Cash flow calculations show whether your business has more cash or less cash over a given time period.

Why is cash flow important?

While it’s great to make a sale and send out an invoice, what really matters is getting actual cash payments into your bank account from customers. That’s because you can pay suppliers, employees, landlords and tax authorities only with the money you actually have. You can’t settle bills with unpaid invoices. You can, of course, borrow money to tide you over, but this is often a symptom of poor credit management and cash flow management. These are sure signs that a company is heading for trouble.

On the other hand, your business may have no problem generating cash flow, but it may lack discipline in controlling expenditures. If you’re spending money faster than you’re earning it, this is an early warning sign that you should not ignore.

If your projected cash flow is positive (that is, your bank balance over time is going up), it’s easier to be confident about spending decisions. For example, if you want to purchase capital equipment, you’ll know if your business can truly afford it.

How can businesses improve cash flow?

To improve your net cash flow, consider taking the following steps:

  • Focus on accounts receivable. Check who owes you what, and chase customers who haven’t paid by their invoice due date. If getting customers to pay on time is a problem, set up a reminder to contact a customer when payment is due. Companies selling to other businesses could also consider using invoice factoring to improve cash flow.
  • Cut operating expenses. In many SMBs, there are no effective controls or checks on spending. Look for opportunities to find new suppliers offering the same products and services at better prices.
  • Check inventory levels. Be careful not to order too much stock, as this ties up your cash. If you’ve got stock that’s not sold for a while, consider selling it at a discount to raise cash.
  • Offer early discounts. To encourage customers to pay their bills early, offer them a small discount for settling up by a given date.
  • Talk to your suppliers. It’s always worth approaching your suppliers to see if they can offer you better terms. Many will be amenable to that as long as you’ve established a track record of paying them on time.

Why is cash flow better than profit?

Cash flow is better than profit at giving you an accurate, real-time picture of your company’s finances. Businesses can make a profit but not have enough money to meet their financial obligations if their customers don’t pay them fast enough.

What is a cash flow statement?

A cash flow statement is useful because it shows how money is coming into and leaving your business over a defined period of time. It is normally divided into three sections: cash flow from operations, cash flow from investing and cash flow from financing. A cash flow statement gives a detailed overview of your company’s cash position and helps you make better spending and investment decisions.

Mark Fairlie
Mark Fairlie
Senior Analyst & Expert on Business Ownership
Mark Fairlie has written extensively on business finance, business development, M&A, accounting, tax, cybersecurity, sales and marketing, SEO, investments, and more for clients across the world for the past five years. Prior to that, Mark owned one of the largest independent managed B2B email and telephone outsourcing companies in the UK prior to selling up in 2015.
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