The worked example below finishes with ₹5,18,000 but has only ₹8,000 left after Month 1. A single delayed customer payment turns that first month into a projected shortfall. Here is how to build a forecast that makes that risk visible.
Start with cash available and payment dates
Use your available business cash at the start of the forecast. If you are launching, subtract startup payments already made before setting that opening balance. Do not count the original investment again as new cash. For pre-opening requirements, see the startup capital and break-even guide.
For each month, list expected cash receipts and payments, then calculate:
Closing cash = opening cash + cash received − cash paid out
Carry that closing balance into the next month's opening balance. Label estimates and explain their basis. This is the basic forecasting method described by business.gov.au.
Put payments in the month they are due. An annual bill belongs in its payment month, rather than being spread evenly simply to make the forecast smoother.
A worked example for a small design service
These are hypothetical INR amounts, not researched market prices or evidence of achievable demand. The example assumes:
- Opening cash is ₹40,000, after all startup payments, with no earlier customer receivables or unpaid supplier bills.
- Invoices cover services completed that month. Customers pay 50% in the same month and 50% the following month, without overdue payments or bad debts in the base case.
- Direct costs equal 20% of that month's invoiced sales and are paid immediately.
- Fixed cash operating costs are ₹30,000 monthly. Owner withdrawals are another ₹20,000, not already included as salary in those costs.
- There is no additional capital, financing or equipment purchase during the period.
Sales growth and the slowdown in Months 7 and 8 are invented assumptions. Taxes and depreciation are excluded; this is a simplified planning example, not a complete accounting forecast.
All figures in the table are ₹000. For example, 60 means ₹60,000.
Scroll horizontally to read every column. Keyboard users can focus the table region and use the arrow keys.
| Month | Invoiced sales | Cash received | Direct costs | Fixed costs | Owner withdrawals | Net cash change | Closing cash |
|---|---|---|---|---|---|---|---|
| 1 | 60 | 30 | 12 | 30 | 20 | −32 | 8 |
| 2 | 80 | 70 | 16 | 30 | 20 | 4 | 12 |
| 3 | 100 | 90 | 20 | 30 | 20 | 20 | 32 |
| 4 | 120 | 110 | 24 | 30 | 20 | 36 | 68 |
| 5 | 120 | 120 | 24 | 30 | 20 | 46 | 114 |
| 6 | 140 | 130 | 28 | 30 | 20 | 52 | 166 |
| 7 | 100 | 120 | 20 | 30 | 20 | 50 | 216 |
| 8 | 100 | 100 | 20 | 30 | 20 | 30 | 246 |
| 9 | 140 | 120 | 28 | 30 | 20 | 42 | 288 |
| 10 | 160 | 150 | 32 | 30 | 20 | 68 | 356 |
| 11 | 160 | 160 | 32 | 30 | 20 | 78 | 434 |
| 12 | 180 | 170 | 36 | 30 | 20 | 84 | 518 |
| Year total | 1,460 | 1,370 | 292 | 360 | 240 | 478 | — |
Month 1 closing cash is ₹40,000 + ₹30,000 − ₹12,000 − ₹30,000 − ₹20,000 = ₹8,000.
Month 2 receipts combine ₹30,000 from Month 1 invoices and ₹40,000 from Month 2 invoices. Each later month follows the same collection rule.
The year reconciles as ₹40,000 + ₹13,70,000 − ₹2,92,000 − ₹3,60,000 − ₹2,40,000 = ₹5,18,000. Closing balances are not added together. Another ₹90,000 remains receivable from Month 12, due in Month 13; it is not yet cash.
Why invoiced sales and profit do not show available cash
Record customer receipts when you expect payment, not merely when you issue an invoice. A business can report profit while lacking cash to pay bills. Business Wales explains this timing distinction as a general planning principle.
In Month 1, ₹60,000 of invoiced revenue less ₹12,000 of direct costs and ₹30,000 of fixed costs leaves an ₹18,000 simplified operating surplus, before excluded costs. It is not a full net-profit calculation.
Meanwhile, just ₹30,000 arrives, against ₹62,000 of cash payments including the owner's withdrawal. Cash falls by ₹32,000. The withdrawal reduces available cash but is not counted again as an operating expense in this example.
Test one delayed payment before trusting the balance
Move ₹15,000 of Month 1 receipts into Month 2. Leave sales, costs and withdrawals unchanged.
Month 1 closing cash falls from ₹8,000 to −₹7,000. That represents a projected funding shortfall, not permission to overdraw a bank account. If the delayed amount arrives in Month 2, that month's closing balance returns to the base-case ₹12,000, assuming everything else stays unchanged.
Before committing spending, consider whether a smaller launch, staged optional purchases or agreed customer payment timing would change that result. Do not assume you can delay an agreed supplier payment without agreement.
Keep the forecast useful after launch
Check these points in your own spreadsheet:
- Lowest balance: identify the month and the receipts it depends on. Monthly totals can hide a shortage earlier within the month, so inspect payment dates closely where cash is tight.
- Evidence: replace invented sales with support from customer discussions, orders and delivery capacity. The business idea validation guide covers testing demand.
- Missing payments: include applicable annual bills, one-off purchases and other cash obligations rather than copying this example's exclusions.
- Actual results: record what arrived and was paid, explain differences, and revise the remaining months. Business Victoria's forecasting guidance recommends comparing estimates with actual cash flows.
Explore your own business assumptions
Try Feasivo's interactive demo to see how assumptions affect a plan. The illustrative walkthrough needs no signup or credits and does not provide downloads.
For your own idea, start with a free preliminary review based on your inputs, without web research. One ₹499 research credit starts a detailed report; once completed, it includes an interactive 12-month forecast and editable Excel workbook. See the current plans.