Why profit is not cash
A business can show a healthy profit and still be unable to pay salaries on the 1st. Customers on 30- or 60-day credit pay after you have already bought materials, paid staff and deposited last month's GST. A loan instalment, a new machine or the festive stock build-up can all land in the same month. A cash flow forecast shows those gaps months in advance, while you still have time to arrange a limit, chase collections or move a purchase.
How the template turns sales into cash
You enter sales excluding GST. The workbook adds GST at your rate and spreads the amount over four months using your collection pattern — for example 30% collected in the same month, 45% next month, 20% in the second month and 5% in the third. Purchases work the same way with your supplier payment pattern. Opening debtors and creditors are settled in the first months as you specify, so the forecast starts from your real position rather than from zero.
Everything else — salaries, rent, power, freight, EMIs, capex, advance tax, owners' drawings, loans received, asset sales — is entered as cash in the month it is paid or received.
GST is a cash item too
GST collected from customers is not your money, but it sits in your bank account until you pay it. The forecast works out output GST on sales less input tax credit on purchases each month and pays the net amount in the following month, in line with the GSTR-3B due date (the 20th for monthly filers). If credit exceeds tax in a month, it is carried forward. Modelling this matters: in a growing month the GST outflow can be larger than many expense lines.
Minimum cash and the funding gap
Set a minimum balance you never want to go below — many small businesses use one to two months of fixed costs. Every month whose closing balance falls under it is marked 'Below min'. The summary shows the lowest balance, the month it occurs, how many months are below the floor and how much extra money you would need to stay above it. That last figure is what to discuss with your bank for a cash credit or overdraft limit, or the amount to cover by speeding up collections.
Planning for the usual Indian cash crunches
Advance tax instalments fall due on 15 June, 15 September, 15 December and 15 March. Diwali brings bonuses and stock purchases a month or two before the sales come in. March often sees big supplier payments and year-end tax. Payments to micro and small suppliers should be made within the agreed period, which cannot exceed 45 days under the MSMED Act. Put these in the inputs and the forecast shows their combined effect month by month.
Free vs Pro
The free edition gives you the complete 12-month forecast with GST, alerts, summary and chart. The Pro edition adds a scenarios sheet (base, downside and upside, including the effect of customers paying a month late) and an actual-vs-forecast sheet that replaces forecast months with actuals as they close and gives you a rolling outlook for the rest of the year.
Written by Prakash Bagchi, finance professional and founder of PB Lab. Last reviewed .