How a cash flow forecast works
A cash flow forecast starts from your current balance and applies one formula twelve times: each month closes with what it opened with, plus cash in, minus cash out, and that closing balance becomes the next month's opening balance. People underrate the carry-forward: one negative month is survivable, but twelve compound, and the forecast shows which month it becomes real.
closing balance = opening balance + cash in - cash out next month's opening balance = this month's closing balance
That carry-forward is the point. A single month of negative cash flow is survivable; twelve of them compound into insolvency, and the forecast shows you which month that becomes real while you still have time to change it.
Growth compounds the same way. Five percent monthly revenue growth is not five percent better over a year. Compounded across twelve months it is close to eighty percent more. The forecast applies it from the second month on, so the month-twelve figure it shows is a little under that. Set growth to zero if you want the pessimistic case, which is usually the more useful one to plan against. To go deeper, read when will you run out of cash or check your burn rate first.
When cash is genuinely tight, professionals switch from months to weeks: the 13-week cash flow forecast runs the same arithmetic at weekly grain, which is what catches a payroll date and a late invoice landing in the wrong order inside an otherwise fine month.
One distinction worth keeping straight: forecasting projects from aggregates, while tracking is the itemized ledger the aggregates come from. If you do not yet know your monthly in and out because nobody has listed the lines, start with the cash flow tracker: track first, forecast from what the ledger shows.