Definition
A cash flow forecast projects cash in/out and ending cash balance over time to manage liquidity.
Formula
Ending cash = beginning cash + inflows - outflows
Example
Starting cash $2M plus $1.2M inflows minus $1.5M outflows ends at $1.7M.
How to use it
- Use weekly or monthly granularity depending on burn and volatility.
- Align assumptions to pipeline, collections, and vendor payment terms.
Common mistakes
- Using revenue instead of cash collections for timing-sensitive plans.
- Failing to update the forecast after large hiring or capex changes.
Measured as
Ending cash = beginning cash + inflows - outflows
Misused when
- Using revenue instead of cash collections for timing-sensitive plans.
- Failing to update the forecast after large hiring or capex changes.
Operator takeaway
- Use weekly or monthly granularity depending on burn and volatility.
- Align assumptions to pipeline, collections, and vendor payment terms.
- Tie Cash Flow Forecast to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Read Runway and burn: gross vs net burn, working capital, and cash levers if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Cash Flow Forecast belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
Where to use this on MetricKit
Guides
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.
- Cash runway: how to estimate burn, break-even, and survival time: A practical guide to runway: net burn, gross profit, break-even revenue, and how to avoid common cash planning mistakes.