What is cashflow, and how do I prepare a cashflow forecast?
Quick answer
Cashflow is the real movement of money in and out of your business. A cashflow forecast is your best estimate of that movement over the coming months, so you can see crunches before they hit. You build it by listing expected cash in, expected cash out, and tracking what's left each month.
The mistake most founders make
Forecasting profit but not cash. You can be “profitable” and still run dry, because bills are paid in cash and on specific dates — a forecast built on cash timing catches what a P&L misses.
What goes into it
Start with your opening cash balance. Then list cash coming in — customer payments (when they'll actually pay, not when you invoice), any funding, other income. Then cash going out — salaries, rent, suppliers, marketing, loan repayments, taxes (GST, TDS, on their due dates). For each month: opening cash + cash in − cash out = closing cash, which becomes next month's opening balance. Watch for the months where closing cash dips dangerously low.
How to build it
Do a rolling view for near-term precision (catching a big payment slipping or a tax date landing), and a 12-month view tied to your fundraise. Base it on real timing — when money actually lands and leaves — not on when you booked the revenue. Update it against reality every month.
Our honest take
A cashflow forecast is the cheapest insurance a startup can have. It turns “we ran out of money” into “we saw it coming three months ago and raised in time.” Build one before you think you need it.