Written by Behdad Karimi Dermeni, CPA · Reviewed by Maryam Ajorloo, CPA
A cash flow projection estimates the cash that will come into and go out of your business bank account each month, so you can see your closing balance before you get there. Start with the cash you have today, add expected customer payments, subtract every bill, tax payment and owner draw, and roll the balance forward.
Most small business owners know whether they had a good year. Fewer know whether they will have enough cash on April 15, when last year's tax bill and this year's first estimated payment land on the same day. A cash flow projection template answers that question while there is still time to do something about it.
This free cash flow projection template gives you 12 months in Excel, with no form to fill out. It already has lines for quarterly estimated taxes, payroll tax deposits and owner draws, which are the payments generic templates tend to bury under "Other."
Once the projection is set up, the actuals are the easy part: connect your bank to ReInvestWealth and let your real numbers fill themselves in.
Download the free cash flow projection template (Excel)
Download the cash flow projection template (Excel, free, no sign-up)
It opens in Excel, Google Sheets and Numbers. No email address required, and nobody will follow up with a "quick call." Inside you get three tabs:
How to use: short fill-in instructions, so you can complete it without this page open.
12-Month Projection: the blank template. Yellow cells are inputs; everything else calculates. Enter your first month, the cash in your bank today and a minimum cushion, and any month that dips below the cushion turns red and says LOW.
Example: a filled-in projection for a consultant who pays quarterly estimated taxes, so you can see what a finished one looks like.
The template is organized into three blocks, read top to bottom:
Cash in: payments from customers, other income, loans received, and owner contributions.
Cash out: 19 lines covering rent, software, insurance, contractors, wages, payroll tax deposits, loan repayments, equipment, estimated tax payments, any tax balance due with your return, and owner draws or distributions.
Cash position: net cash flow, opening cash, and closing cash, which becomes next month's opening cash automatically.
Cash flow vs profit: why the projection matters
Profit is what your profit and loss statement says you earned. Cash is what your bank says you have. They are different numbers, and the gap between them is where small businesses get into trouble.
A few things that move cash without touching profit:
A client pays in 60 days. You earned the revenue in March. The money arrives in May.
You buy a laptop. It is one big cash payment now, even though the cost may be deducted differently on your tax return.
You pay estimated taxes. Real cash leaves four times a year, and none of it shows up as a business expense.
You repay a loan or pay yourself. Loan principal and owner draws are not expenses, but they empty the account all the same.
So a business can be profitable on paper and still run short of cash in a specific month. (Profitable and broke at the same time is a surprisingly popular combination.) The projection is how you see that month coming. If the difference between cash and profit is new to you, cash vs accrual accounting explains it in plain English.
For the profit side of the story, the Business Budget Calculator is the companion tool: the budget plans what you will earn and spend, and the cash flow projection shows when the money actually moves.
How to create a cash flow projection in 6 steps
Here is the rule of thumb that makes every step easier: record each amount in the month the money actually moves, not the month you send the invoice or receive the bill. Get the timing right and the rest is arithmetic.
Set your starting point. Enter the first month of the projection and the cash in your business bank account today. Use the real balance, not the balance you wish you had. Then choose a minimum cushion, for example one month of fixed costs, that you never want to dip below.
Estimate the cash coming in. For each month, enter what you expect to collect from customers, not what you expect to invoice. If clients usually pay in 30 days, March's work shows up in April. Be honest about the slow payer; the spreadsheet will not tell on you.
List every cash outflow in the month it is paid. Start with fixed costs (rent, software, phone, insurance), then variable costs (contractors, supplies, marketing). Do not forget the annual and lumpy ones: an insurance policy paid once a year, your accountant's tax-season fee, equipment, and software billed annually.
Add your tax payments. Quarterly estimated taxes, any balance due when you file, payroll tax deposits if you have employees, and sales tax if you collect it. These are the lines that sink most projections, so the next section covers them in detail.
Calculate closing cash and roll it forward. Cash in minus cash out gives you net cash flow. Opening cash plus net cash flow gives you closing cash, which becomes next month's opening cash. The template does this for you across all 12 months.
Stress-test it, then update it monthly. Ask what happens if your biggest client pays a month late, or a slow month comes in 20% light. Then, at the end of each month, replace the estimate with what really happened and add a new month at the end.
The tax payments that sink most cash flow forecasts
Taxes are rarely a surprise in size. They are a surprise in timing, because nobody withholds them for you once you work for yourself. Put these in your projection on day one.
Quarterly estimated taxes
If you expect to owe $1,000 or more when you file, the IRS generally expects you to pay estimated taxes during the year (the threshold is $500 for corporations). For sole proprietors and single-member LLCs, that covers both income tax and self-employment tax.
For calendar-year taxpayers, the payments are due April 15, June 15, September 15, and January 15 of the following year. Notice the gaps are uneven: two months, then three, then four. Many states with an income tax run a similar quarterly schedule, so add your state payments on the same line.
Missing them costs you a penalty on top of the tax. If you want to see what a late or skipped payment would add, the tax penalty calculator works it out.
The April 15 pile-up
April 15 deserves its own line in your head. It is the day you pay any balance due on last year's return and the first estimated payment for this year. Two tax payments, one date, often right after a slow first quarter. A projection turns that from a surprise into a line you planned for in January.
Payroll tax deposits
If you have employees, the income tax, Social Security and Medicare you withhold from their pay is not yours to keep. Most small employers are monthly depositors, which means the deposit is due by the 15th of the following month. Larger payrolls deposit semiweekly. In the template, enter net pay on the "Wages" line and the deposit on the "Payroll tax deposits" line a month later, along with any state payroll taxes. Hiring your first person? 1099 vs W-2 covers which payments come with payroll taxes and which do not.
Sales tax, if you collect it
If your state taxes what you sell, the sales tax on your invoices lands in your account but belongs to the state, and it leaves again when you file. Enter it on the "Sales tax remitted to your state" line in the month you send it. Rules vary widely by state and by what you sell, and many service businesses do not collect sales tax at all; if that is you, leave the line at zero.
Owner draws and distributions
Paying yourself is cash out, even though it is not a business expense. Put it on its own line so you can see what the business can actually afford to pay you each month. How to pay yourself from an LLC, S-corp or sole proprietorship explains the options.
The business that sees these lines coming on a calendar is calm in April. The one that does not is suddenly very interested in its credit card limit.
This is exactly the kind of tracking ReInvestWealth handles for you: your bank transactions come in automatically and the AI Bookkeeper categorizes them, so your actual numbers are ready when you update the projection. See how it works.
A worked example: a consultant's first four months
Here is the start of the Example tab in the template. It follows a consultant running a single-member LLC who pays quarterly estimated taxes, takes a $5,000 owner draw each month, starts January with $9,000 in the bank, and wants to keep at least $6,000 on hand.
January: $8,000 comes in. $7,190 goes out, including a $1,200 annual insurance policy. Closing cash: $9,810.
February: a big client pays late, so only $5,500 comes in, while a $2,200 laptop and a $1,500 contractor bill go out. Net cash flow is negative $4,190 and closing cash drops to $5,620, below the $6,000 cushion. The template flags it LOW. Nothing went wrong in the business; the money just arrived later.
March: the late payment lands and $9,500 comes in, minus the accountant's $900 tax-prep fee. Closing cash: $8,230.
April: $9,000 comes in, but April 15 takes $3,500 in one day: the $2,000 first-quarter estimated payment plus a $1,500 balance due on last year's return. Net cash flow is negative $490 and closing cash is $7,740.
The useful part is not the numbers themselves. It is that the February dip and the April pile-up were both visible in January, when moving the laptop purchase to March or asking for a deposit would have kept the cushion intact.
How to read your cash flow projection
Once the numbers are in, read the closing cash row from left to right. You are looking for two things.
A month below your cushion (a shortfall). You have time to act, which is the whole point. You can:
Speed up cash in: invoice the day the work is done, shorten payment terms, or ask for a deposit on large projects. A free invoice generator makes the first one painless.
Move cash out: shift a planned purchase to a stronger month, or spread a large bill over two.
Arrange credit before you need it: a line of credit is much easier to set up when your projection says you will not need it.
A cushion that keeps growing (a surplus). That is good news, and it is also a decision. You can top up a tax reserve, pay down debt, or take a larger owner draw, knowing exactly which months can afford it.
12-month vs 13-week cash flow forecast
The template uses 12 months because that is what most planning, lenders and business plans ask for. It shows seasonal patterns, annual bills and the full estimated tax calendar.
A 13-week cash flow forecast is the short-range version, tracked week by week. It makes sense when cash is tight, when you are about to make a big hire or purchase, or when a lender asks for one. The method is identical (opening cash, cash in, cash out, closing cash), only with weeks instead of months.
A practical approach: keep the 12-month projection as your map, and switch to a weekly view only for the stretch of months the map flags as tight.
Keep the projection honest with real numbers
A projection is only as good as the actuals you compare it to. The monthly habit takes about 15 minutes:
Pull last month's actual cash in and cash out from your books, not from memory.
Overwrite the estimate with the real figures, and note anything that surprised you.
Add one more month at the end, so you always have a full year in view.
The hard part is the first step, because it needs books that are up to date. That is where ReInvestWealth comes in. You connect your bank once, the AI Bookkeeper categorizes your transactions, and financial reports like your profit and loss statement and balance sheet are ready whenever you are. If you are not sure what those reports are telling you, how to read a profit and loss statement takes five minutes.
Your spreadsheet does the forecasting. Your books do the remembering.
Frequently Asked Questions
Is a cash flow forecast the same as a cash flow projection?
Yes, for small business purposes the two terms mean the same thing: an estimate of the cash coming in and going out over the coming months, and the balance left at the end of each one. U.S. banks and SBA lenders use both terms, and the template and the method are identical either way.
Do I need a cash flow projection for an SBA loan?
Often, yes. The SBA's 7(a) loan application checklist asks for a detailed one-year projection of income and finances, with a written explanation of how you expect to achieve it, and lenders commonly want it month by month for newer businesses. The 12-month template covers that format; ask your lender exactly what they want.
Should I include estimated tax payments in my cash flow projection?
Yes. Estimated taxes are real cash leaving your account four times a year, and they are usually the largest payments a self-employed person makes. For calendar-year taxpayers, put the federal payments in April, June, September and January, add your state's estimated payments if it has an income tax, and include any balance due when you file.
Does my cash flow projection need to include self-employment tax?
Yes, if you are a sole proprietor or single-member LLC owner. Self-employment tax is 15.3% (12.4% Social Security plus 2.9% Medicare) and applies once your net earnings from self-employment reach $400. You generally pay it through the same quarterly estimated payments as your income tax, so it belongs on that line rather than as a separate surprise in April.
How do payroll taxes show up in a cash flow projection?
As two separate lines. Net pay goes out on payday, and the withheld income tax, Social Security and Medicare, plus your employer share, go to the IRS as a deposit, by the 15th of the following month for most small employers. You file Form 941 quarterly, and federal unemployment (FUTA) is deposited once the quarter's liability passes $500.
Is this cash flow projection template free?
Yes. The template is a free Excel download in U.S. dollars, with no sign-up and no form, and it also opens in Google Sheets and Numbers. It includes a blank 12-month projection, a filled-in example for a consultant paying quarterly estimated taxes, and step-by-step instructions.
Plan the cash, then let the books keep up
A cash flow projection takes an afternoon to set up and a few minutes a month to maintain, and it turns "I think we're fine" into a number with a date on it. Download the template, put in your real opening balance, and add your tax dates before anything else.
When you want the actual numbers to arrive on their own, connect your bank and let the AI categorize your transactions. Built by CPAs, with clean books ready for your accountant at tax time. Start free for 30 days.
A note from our CPAs: This template and guide are educational and cover the general rules for U.S. small businesses. Tax situations vary, so for advice on your specific circumstances, including your estimated tax amounts and payroll deposit schedule, talk to your accountant. (If they use ReInvestWealth, they'll already have clean books to work from.)
Written by Behdad Karimi Dermeni, CPA
Co-founder of ReInvestWealth and a founding community builder at Stripe. Behdad built ReInvestWealth to give smart, busy entrepreneurs CPA-level accounting without the CPA-level price tag. Read more · Connect on LinkedIn
Reviewed by Maryam Ajorloo, CPA
Maryam Ajorloo is the co-founder of ReInvestWealth and a CPA who specializes in small business tax and everyday bookkeeping. She helps entrepreneurs keep clean, audit-ready books and make sense of write-offs, filing deadlines, and the numbers behind their business. Read more · Connect on LinkedIn