Open Source Startup: Cash Flow Template

Welcome to Chapter 3 of Open Source Startup: Cash Flow Template. For a table of contents, head over to the Introduction here

Cash flow. The lifeblood of any business - and a tricky little devil to keep under control.

Something I've always struggled with is a solid, simple, cash flow (or cash forecast) template. Accounting can get cloudy for everyone except accountants - and all entrepreneurs need a tool to tell them whether this idea or business they're testing has a chance of succeeding.

I particularly like this template because it can be used to test an idea and estimate revenues. It can also be used to run a business - it provides a very clear picture on whether you're making or losing money every month and how many months runway you have before you run out of money.

I've included some of the more common cost categories to get you started. Out of interest, the test data I've included shows a small business that's generating revenue and angel investment, but is doomed to fail after a year without growth. The story of many I suspect :)

Things to think through:

Monthly management. It's all fairly easy. At the beginning of each month, hide the previous month's column (this allows you to go back to it if you need) and put your bank balance in the top left cell. Every cell that is shaded grey is calculated for you, every other cell is for your cashflow inputs.

Cash (in bank) is King. Payment terms can play havoc with cashflow - both corporates and government aren't known for expedient payments. Put your income down in the month's where you expect it to be paid into your bank account, NOT the month you invoiced it.

There is a useful line near the top to put in the amount outstanding (or outside of payment terms) from current revenue streams. Just make sure you've got a plan to actually get it!

VAT, UIF and other such fun. All these numbers (revenue and expenses) exclude VAT - you may want to put a VAT control line item in here to make sure you're putting it aside. Many a good SME has been sunk by the VAT monster.

The UIF line is a rough calculation of 1.5% of your salary bill - just an indicator to be aware of.

Salaries include PAYE - think of them as straight cost-to-company of yourself and your people.

Cost of Sale. This particular cash flow also excludes Cost of Sale, but it's fairly easy to turn the Debt section into a place for a simple Cost of Sale. A more retail or unit based business may want to tweak the template even more as it can be useful to work on unit sales and profit margins - not combined income. This template is better suited to consulting, agency, retainer or license-fee based businesses.

Enjoy populating the template - feel free to share your (clean) versions in the comments!

Disclaimer: The information in these posts work for us. I cannot and will not guarantee that they'll work for you. Consult the right professional to make sure.


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