How is the closing balance calculated each month?

Each month starts with the previous month's closing balance as its opening balance. Net cash flow for the month is revenue minus operating costs minus capital outlays. The closing balance is the opening balance plus net cash flow, and that figure carries into the next month.

What is the difference between operating costs and capital outlays?

Operating costs are recurring monthly outflows — salaries, rent, subscriptions. Capital outlays are large one-off purchases such as equipment or a deposit. Separating them keeps the projection honest, because a one-off £20,000 purchase shouldn't be mistaken for a permanent monthly cost.

How do I read my runway from this?

Runway is how many months until you run out of cash. Scan the closing-balance column for the first month it goes negative — that is when you are out of money at the current plan. Months remaining before that point is your runway, the single most important number for a startup.

Is cash flow the same as profit?

No. Profit is revenue minus costs on an accruals basis; cash flow is the actual movement of money in and out of the bank. A profitable business can still run out of cash if customers pay late or it buys a lot of stock upfront. Cash flow is what keeps the lights on.

Why do investors ask for a cash flow projection?

It shows how long their money lasts and when the business reaches a point where it funds itself. A 12-month projection with a clear closing balance per month tells an investor your burn rate, your runway, and the size of round you need. Vague revenue claims without a cash projection rarely convince.

Cash Flow Projection Builder

See exactly when the cash runs out — before it does

Businesses rarely fail because they were unprofitable on paper; they fail because they ran out of cash. A cash flow projection is the antidote: a month-by-month picture of money in, money out, and the running bank balance. This builder takes your opening balance, monthly revenue, operating costs, and one-off capital spend, and computes net cash flow and a carried-forward closing balance for every month — flagging the first month the balance turns negative.

How it works

The projection is a running balance. Each month’s close becomes the next month’s open:

Month net cash flow = revenue − operating costs − capital outlays
Closing balance     = opening balance + net cash flow
Next opening balance = this closing balance

Month one opens with the cash you have today. From there the closing balance chains forward, so a strong month lifts your runway and a heavy month draws it down. The tool highlights the first month the closing balance goes negative — that is the point where, on the current plan, you run out of money. The number of months before that is your runway.

Tips and notes

Keep operating costs (recurring) separate from capital outlays (one-off) so a single big purchase doesn’t masquerade as a permanent expense. Be conservative on revenue and generous on costs — projections that assume everything goes right are the ones that surprise founders. The headline output is the closing-balance row: scan it for the first negative month, and treat the months before it as your true runway. Remember cash flow is not profit — late-paying customers can make a profitable business cash-negative, which is exactly why this projection exists. Use it to size a fundraise: the gap to your lowest balance, plus a buffer, is roughly what you need to raise.

Cash Flow Projection Builder

Email me this result

See exactly when the cash runs out — before it does

How it works

Tips and notes