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Business cash flow: collections vs. payments

Project your cash balance day by day from sales, payment methods, supplier terms and fixed expenses. See the average days to collect and to pay, and the day cash gets tight.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Example values. The projection starts today and assumes the business is already running.

How you get paid
Method% salesDaysFee (%)
Cash, debit, bank transfer
Credit card
Card, 3 installments
Invoice on net terms

How you pay

Other expenses are paid throughout the month. Each month’s taxes are paid on the 20th of the following month.

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—Lowest balance in the period
—

Daily cash balance

Balance at the end of each day, with collections and payments on their expected dates.

Tap the chart to see the values.

Money in and out by week

Collections and payments added up each week.

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When money comes in and goes out

Share of each sale that comes in and share that goes out for purchases, expenses and taxes, by days after the sale. The lines mark the average terms.

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Week by week

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Daily balance = previous balance + collections − (suppliers + fixed expenses + taxes)
Collection per method = daily sale × % × (1 − fee), on sale day + term; 3 installments every 30 days
Average days to collect = Σ (% of each method × term; installments count term + 30)
Purchases = sales × purchase %, paid on supplier terms; each month’s taxes paid on the 20th of the next month

Assumptions and limits

  • Sales spread evenly over the days, growing each month; earlier months’ sales are already receivable at the start.
  • Bad debts, early collection of receivables, seasonality and stock above replacement are not considered.
  • Projection based on the inputs entered; the real balance depends on bad debts, seasonality and surprises.

Official sources and references

  • U.S. Small Business Administration, manage your finances.
  • Brealey, Myers & Allen. Principles of Corporate Finance (short-term financial planning). McGraw-Hill.

Frequently asked questions

What is a cash flow projection?

A forecast of money coming in and going out of the business each day or month, to see when the balance will be short or have room to spare.

Why can a profitable business run out of cash?

Because it collects from sales after paying suppliers and expenses. Profit shows up in the income statement, but the money has not reached the bank yet.

How do I read the default example?

With $150,000 of monthly sales growing 5%, collecting in 35 days on average and paying suppliers in 21, the highlighted figure is the lowest balance in the next 90 days. If it is negative, that is the credit line or reserve the business needs before that date.

What are average days to collect?

The average number of days between a sale and the cash arriving, weighted across all payment methods. Card installments push it up because each installment arrives a month later.

How can I improve cash flow?

Encourage faster payment methods, reduce long installment plans, negotiate longer supplier terms and spread fixed payments over the month. Arrange a credit line before you need it.

Where do I get the percentages and fees?

From your card processor and bank statements for payment methods and fees, and from purchase invoices for supplier terms. Use a three-month average.

Is the projection exact?

No. It assumes sales spread evenly across days and ignores bad debts, seasonality and unusual stock purchases. Update it monthly and compare with your real bank statement.

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Cash flow: how to see when money will run short

A profitable business can still run out of cash. It happens when customers pay after the business has already paid suppliers, payroll and taxes. A cash flow projection puts every payment and every collection on its date and shows the lowest balance ahead, before it becomes a problem.

What drives the balance

Ending balance = opening balance + collections − payments, day by day. Collections depend on how customers pay: cash and debit come in almost at once, card sales usually settle in about 30 days, installments spread over several months and invoices on net terms arrive when they are due, minus fees. Payments include suppliers on their terms, payroll, rent, other expenses and taxes.

Example

ItemValue
Monthly sales$100,000
Average days to collect35
Supplier terms20 days
Purchases55% of sales
Gap the business funds15 days of purchases ≈ $27,500

Growth uses cash

When sales grow, purchases for the higher volume go out before the extra sales are collected. That is why fast-growing businesses often feel short of cash even with good margins.

How to improve cash flow

Encourage faster payment methods, limit long installment plans, negotiate longer terms with suppliers, spread fixed payments across the month and keep a credit line arranged before you need it.