Practical guide
Understanding small-business cash flow — two-scenario comparison
Everyday editorial team · GEOINNOVATION CO., LTD · Published · Updated
What this calculation is for
A business cash forecast tracks collected money rather than accounting profit. Receivables that have not been collected cannot pay this month’s bills simply because they were recognized as revenue.
How the method works
Opening cash changes each month by the entered receipts and recurring expenses. The named growth assumption changes the modeled receipts stream, and the lowest balance highlights a potential cash squeeze. The displayed model uses: Forecast cash balance by month from opening cash, collected receipts and recurring expenses.
A worked example
For an illustrative small-business cash flow scenario, use Available business cash: 45000 $; Monthly collected revenue: 28000 $; Monthly operating expenses: 24000 $; Expected monthly receivables: 6000 $; Expected monthly change in receipts: 0 %; Projection horizon: 12 months. The modeled projected cash after horizon is $165,000. These are example assumptions, not current prices, official benefit amounts or personalized advice.
Assumptions and real-world differences
Revenue and additional receivables should not contain the same payment twice. Inventory timing, tax, debt service, seasonality and delayed collections require explicit allowances outside a simplified constant-expense scenario. Taxes, inventory, debt, timing and seasonal receipts need separate estimates; not accounting advice.
Building two independent scenarios
Scenario A and Scenario B each have a complete set of inputs for this small-business cash flow calculation. Change several inputs in B when comparing genuinely different plans, then inspect the B-minus-A headline difference and the detailed rows. When multiple inputs change, the total difference cannot be attributed to just one of them.
Reproduce this tool’s example
These fixed example inputs are independent of edits you make above. Enter them in this tool to reproduce the result, then replace them with your own assumptions.
- Scenario A — Available business cash
- 45,000 $
- Scenario A — Monthly collected revenue
- 28,000 $
- Scenario A — Monthly operating expenses
- 24,000 $
- Scenario A — Expected monthly receivables
- 6,000 $
- Scenario A — Expected monthly change in receipts
- 0 %
- Scenario A — Projection horizon
- 12 months
- Scenario B — Available business cash
- 56,500 $
- Scenario B — Monthly collected revenue
- 28,000 $
- Scenario B — Monthly operating expenses
- 24,000 $
- Scenario B — Expected monthly receivables
- 6,000 $
- Scenario B — Expected monthly change in receipts
- 0 %
- Scenario B — Projection horizon
- 12 months
Scenario B result: $176,500
Scenario A: $165,000. Projected cash after horizon.
- Scenario A main result: $165,000
- Scenario B main result: $176,500
- Numeric difference (B − A), in result units: 11,500
Frequently asked questions
- Can a profitable business still run out of cash?
- Yes. Collection delays, inventory and debt payments can create a cash shortage even when reported profit is positive.
- Which inputs should I check before using this small-business cash flow estimate?
- Check available business cash, monthly collected revenue, monthly operating expenses, expected monthly receivables, expected monthly change in receipts, projection horizon. Match each field’s unit and time period, then compare the detailed rows rather than treating the headline alone as the complete answer.
- Why is this different from the one-factor comparison?
- The one-factor tool changes only available business cash. This version lets all model inputs differ, so it is more flexible but does not isolate the effect of any single change.