Cash flow calculator: how to work out your future balance

What a cash flow calculator should be able to do

If the task is to find out a future balance, simply adding up income and expenses is not enough.

Say you have 550,000 ₽ now. Over the next six months you expect 900,000 ₽ of income and 800,000 ₽ of expenses. On paper everything is fine: 650,000 ₽ should be left.

But that calculation says nothing about when exactly the money arrives and when it leaves.

If 200,000 ₽ arrives on 10 January and 150,000 ₽ has to be paid on 5 January, the month ends positive. Yet on 5 January there may not be enough money.

So a good cash flow calculator has to answer several questions at once:

• how much money each account will hold in the future;
• what happens to the balance on a specific date;
• when regular and one-off payments arrive;
• what happens with a monthly, quarterly or other schedule;
• how much money is left in a month, six months or a year;
• what changes if one of the conditions changes;
• whether several options can be compared.

The longer the horizon and the more varied the payments, the more visible the gap between a simple calculation and a proper model.

An example: the money is there, but the plan still needs checking

Take an ordinary situation. Say you are a designer working with several clients.

You keep money in two places:

• card: 150,000 ₽;
• savings: 400,000 ₽.

Let us look at the period from 1 October to 31 March.

Income:

• client A pays 120,000 ₽ every month on the 10th;
• client B pays 180,000 ₽ once a quarter, on 25 October and 25 January.

Expenses:

• living costs, phone and transport: 70,000 ₽ on the 1st of every month;
• mortgage: 55,000 ₽ on the 5th;
• car insurance: 60,000 ₽ on 15 November;
• transfer to savings: 50,000 ₽ on the 26th of every month;
• holiday: 250,000 ₽ from savings on 1 February.

By the end of March the total should come to 570,000 ₽.

The question is not whether that total works out. It does.

The question is different: will there be enough money on every date in between?

And this is where different methods of calculation start giving very different results.

A sheet of paper or a note on your phone

For one month this works perfectly well.

You write down:

150,000 + 120,000 + 180,000 − 70,000 − 55,000 = 325,000 ₽

With five or seven payments you can estimate the balance quickly. No special tool is needed.

But try doing the same for six months.

Recurring payments appear, quarterly income, a holiday, insurance and a transfer between your own accounts. Then you decide to put aside 30,000 ₽ instead of 50,000 ₽.

The calculation has to be rewritten.

And if you want to compare two options, you now have two notes.

Paper works for a quick estimate. For a forecast over several months with options it becomes awkward.

Excel or Google Sheets

There is far more you can do here.

You can calculate by day, give every payment its own row, add formulas and get the balance on any date.

For our example Excel can quite easily show that on 5 January, after the expenses, the balance drops below zero.

But all the logic of the calculation is on you.

Client B pays once a quarter? The dates have to be set correctly.

The transfer to savings is skipped in December? An exception has to be added.

Want to compare a 30,000 ₽ transfer with a 50,000 ₽ one? You will have to build another calculation or copy the existing one.

That does not mean Excel is bad for money movement. On the contrary, you can build a very complex model in it. The problem is the amount of manual work and the fact that you are responsible for all the logic yourself.

More on where Excel stops coping with a forecast.

An online cash flow calculator

When people look for an online cash flow calculator, they often want something as simple as possible: enter the current amount, monthly income, expenses and a term, and get the future balance.

For a simple task that is enough.

For example:

• 300,000 ₽ now;
• income of 150,000 ₽ a month;
• expenses of 100,000 ₽;
• a term of 6 months.

The calculator shows the result quickly.

But our example is more complex. Income arrives on different dates. One source is quarterly. There are two accounts. There are one-off expenses. There is a transfer between accounts.

If the calculator only counts the average movement for a month, it can show a good result and miss the problem inside the month.

So a cash flow calculator is worth judging not by a nice final number but by which starting conditions it lets you set.

An expense tracking app

Expense apps solve a different problem.

They answer these questions well:

• how much I spent;
• where the money went;
• how much went on groceries;
• how much is left right now.

Some let you account for future charges.

But if you want to build your own scenario six months ahead, things change.

Say one client is due to pay 180,000 ₽ in four months. You are going on holiday in February and want to move part of the money to savings. Plus you have a mortgage.

What you need here is not an analysis of the past but a forecast of future money movement.

If the task is to understand where last month’s money went, an expense app is the better fit. If you need to see what happens to the money next, you need a different tool.

Management accounting systems

At the other end are full financial planning systems.

They are built for situations with many accounts, employees, obligations, projects and regular payments.

For a small personal model that is often overkill.

If you need to know whether there is enough money for the mortgage, a holiday and a few future payments, there is no point turning the task into full management accounting.

What is needed is something in between: a detailed enough forecast without an accounting system around it.

How to calculate the movement of money in Cashflow

Cashflow builds a forecast from separate accounts, payments and schedules.

In our example the card and the savings become two accounts, and future income and expenses are set as separate rules.

For example:

• client A: 120,000 ₽ every month on the 10th;
• client B: 180,000 ₽ on 25 October and 25 January;
• mortgage: 55,000 ₽ on the 5th of each month;
• living costs: 70,000 ₽ on the 1st;
• savings: 50,000 ₽ on the 26th;
• holiday: 250,000 ₽ on 1 February.

The calculation runs date by date and shows the balance of each account.

As a result you see what the monthly total does not show.

On 5 January, after the expenses, the card goes negative: −20,000 ₽. On 10 January the next 120,000 ₽ arrives and the balance becomes 100,000 ₽.

So the overall result for the period is fine, but a specific payment between two receipts does not go through.

This is one way to check the quality of a forecast. If a calculator only shows the monthly total, a situation like this is easy to miss.

More on the problem itself in the article what a cash gap is and how to see it in advance.

What to do if you do not like the forecast

After the calculation you can change the conditions and look at another option.

For example, move 30,000 ₽ to savings every month instead of 50,000 ₽.

Then the card balance after the January mortgage payment is 40,000 ₽. No cash gap.

On 31 March the total is still 570,000 ₽. The money is simply split between the accounts differently.

There is a third option: keep the 50,000 ₽ transfer but skip the one on 26 December.

Then the card holds 30,000 ₽ on 5 January, and the payment goes through too.

At the end of March you get:

• card: 170,000 ₽;
• savings: 400,000 ₽;
• total: 570,000 ₽.

Here is the interesting part: all three options give the same final total. Only the distribution of money over time differs.

That is why calculating the movement of money is not about one number at the end of the period. It is about seeing the whole path the money takes to get there.

In Cashflow different options can be built as separate flows and compared with each other.

If you want to build your own example, you can calculate your own case in Cashflow.

Which cash flow calculator to choose

There is no single tool for every case.

To quickly estimate one month, paper or a simple calculator is enough.

If you want to build your own complex spreadsheet with formulas, Excel will do.

To see how much money is left in a few months with simple, constant income and expenses, a simple online calculator will do.

If you are interested in the past, an expense tracking app is more useful.

If the financial model is large, with many participants, accounts and obligations, it makes sense to look at management accounting systems.

And if the task sounds like this:

“I have several accounts, income arrives on different schedules, there are regular and one-off expenses. I want to know in advance how much money there will be at any moment and compare different options.”

Then you need a calculation that works with money moving over time, not just with a monthly total.

Cashflow is built for exactly this: you set accounts, money movements, schedules and several versions of the future, then look at the balance on the date you need.

There is a separate guide on this: how to build a model of your money from scratch.

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