Lesson content
Scroll through numbered sections or jump via the outline.
What you'll take away
- Base: pipeline converts at historical rate.
- Downside: 30% slower collections, one enterprise deal slips 90 days.
- Upside: only if contract signed — not 'likely intro'.
Profit ≠ cash in India
You can show accounting profit and still fail because GST, TDS, advance tax, and vendor advances drain cash earlier than revenue lands.
Cash-flow forecasting is about timing — when money moves, not when you recognise revenue.
Build a 12-month rolling forecast
Update actuals monthly; variance analysis beats rebuilding from scratch.
- Row 1: opening cash balance.
- Inflows: customer receipts (lag sales by collection days), investment, loans.
- Outflows: payroll (monthly), rent, vendors (net 30/45), GST paid monthly, TDS deposited, advance tax quarterly.
- Closing balance → feeds next month opening.
GST and working capital
If you collect 18% GST from customers but pay vendors with input credit, timing gaps still hit when output tax exceeds credits.
Export businesses: LUT and refund cycles affect cash — model separately.
Do not treat GST collected as revenue — it passes through.
Scenario planning
Founders who model downside sleep better through Diwali quarter slumps.
- Base: pipeline converts at historical rate.
- Downside: 30% slower collections, one enterprise deal slips 90 days.
- Upside: only if contract signed — not 'likely intro'.
Tools and discipline
Spreadsheet is enough until ₹5–10Cr turnover; then integrate accounting (Zoho Books, Tally, QuickBooks India).
Reconcile bank statement to forecast every month — 30-minute habit prevents surprises.