Calculation of cash flow of a business plan using Excel tools

What is the cash flow of a business plan?

The cash flow of a business plan is the difference between cash receipts and expenditures during a certain period. The cash flow can be calculated by the end of the month or the quarter. However, the cash flow for a business plan is determined on a yearly basis. For more detailed business plans, the quarterly or monthly cash flow for the first year of activity may be calculated.

What is the difference between cash flow and profit?

Profit is the accounting value, which is the difference between enterprise’s income and expenses. Not all receipts of an enterprise are considered revenues. This is especially evident in case of the startup business plan, when the company is just starting to work. For example, transfer of the own funds to a current account for the purchase of equipment is a cash inflow, but not an income.

Similarly, borrowed funds from the bank are cash inflows but not revenues. When it comes to spending, if we buy office rooms or equipment, we generate a negative cash flow, but not expenses. The cost of such purchases is transferred to the expenses gradually, during several years. The process is called a depreciation of fixed assets.

Why is it necessary to plan a cash flow in a business plan?

All performance indicators are calculated on the basis of cash flow, not profit. This is because the investors are primarily interested in current money and not in accounting financial results. The cash flow is used to calculate the indicators as follows:

All these metrics are submitted to the investor or creditor for consideration to make a decision on whether to invest his own funds in the undertaking or not.

How to calculate the cash flow of a business plan in Excel?

Download a template of the business plan in Excel and make use of an automated calculation of the cash flows for five years with the formulas. This provides you with the opportunity to understand how the cash flow calculation and performance indicators of the business plan are made.

The calculations of the cash flow are carried out in an automated way without any errors and may be used in case of a startup with a zero balance.

Download free Excel Template

You can also get templates:

  1. Business plan of a bar in Excel
  2. Bakery business plan in Excel
  3. Business plan of a coffee shop in Excel
  4. Business plan of a cafe in Excel
  5. Business plan of e-commerce store in Excel