Cash gap calculator

Why the lowest point matters more than the average

Most businesses that run out of cash aren't losing money. They're making money on a timetable that doesn't match their bills. Wages leave every week, suppliers want paying in fourteen days, the BAS lands at the end of the quarter, and customers pay when they get around to it. Over a year it all balances out. In a particular week, it doesn't.

That's why this calculator looks for the lowest point in your balance, not the average. If your balance would dip to minus $40,000 in month three before recovering in month five, you need access to at least $40,000 in month three, plus a buffer, even if the six months as a whole are profitable. A business line of credit sized to that gap means you draw it when the dip comes and repay it as the money arrives, paying only for what you use.

How to fill it in well

• Money in: what you expect to actually land in the bank each month, not what you'll invoice. If customers pay on 45 days, a March invoice is May money.
• Money out: everything, including wages, super, rent, suppliers, loan repayments, tax and BAS, insurance and owner drawings.
• Seasonal businesses: start the six months at the beginning of your quiet season, so the trough is included. See irregular income.
• Growth: if you're taking on more work, include the extra costs before the extra income. Growth is a common cause of cash gaps.

Gap or bigger problem?

If the balance dips and then recovers, you have a timing gap, and finance designed for timing, such as a line of credit or invoice finance, is usually the answer. If the balance keeps falling month after month, the business is spending more than it earns, and borrowing will only delay the problem. That's a conversation for your accountant first. We'll tell you honestly which one we think you're looking at.

If the calculator shows a gap and you'd like a facility in place before it arrives, start a 60-second enquiry. There's no credit check when you first enquire, your details aren't passed around a list of lenders, and a real person will help size a limit that fits. Please give us accurate turnover figures on the form so we can match you to the right lender first time.

Frequently asked questions

What is a cash gap?

It's the lowest point your business bank balance would reach over a period, given when money actually comes in and goes out. A negative low point means you'd run out of cash unless you had a buffer or a facility to draw on.

Is the result the amount I can borrow?

No. It's an estimate of the amount you might need. What a lender will approve depends on your turnover, bank statement conduct, credit file and any security.

Why add a buffer?

Because customers pay late, costs arrive early and forecasts are rarely perfect. A buffer stops a small surprise from becoming a missed payroll.

Should I use real numbers or estimates?

Use your best realistic estimates, based on last year's pattern and the work you have booked. Be conservative with money in and complete with money out, including loan repayments, tax and super.

Does this calculator store my numbers?

No. Everything runs in your browser. Nothing is sent to us or anyone else.