The short answer: A SaaS cash flow forecast starts from reconciled bank cash, then projects receipts and payments by month, line by line. In the worked example below, a seed-stage SaaS company opens January with $2,159,450, burns $491,049 over six months, and finishes June with $1,668,401, about 20 months of runway at its average net burn of $81,842 a month.
- Collections from annual prepaid contracts arrive in lumps, so a single month’s burn can understate the true run rate by more than half.
- Deferred revenue is the gap between cash in the bank and revenue on the income statement; the forecast must follow cash.
- Employer payroll taxes are front-loaded each January, when federal and state unemployment wage bases reset.
- Runway should be measured on a trailing multi-month average burn, never on the best month.
Last updated October 2026.
A SaaS cash flow forecast is a month-by-month projection of the cash a subscription company will collect and spend, starting from the balance actually in the bank. At seed stage it answers one question: how many months the company can operate before it needs new capital.
Generic templates miss the lines that move cash in a subscription business. Annual prepayments, card processing, net-30 invoices, and January payroll taxes all shift cash between months. This guide builds a six-month forecast for a modelled seed-stage SaaS company, one line at a time, with the arithmetic shown.
What does a seed-stage SaaS cash flow forecast need to show?
It needs to show opening cash, each receipt and payment line by month, monthly net burn, and closing cash. Runway follows directly from those four rows.
The example company is modelled, though every figure is computed exactly. It sells B2B software, has 11 employees, and closed a seed round last year. Customers buy either a monthly plan paid by card or an annual plan invoiced upfront on net-30 terms.
The horizon here is January through June, in monthly buckets. A seed company deciding when to raise needs a 12–18-month view; a company managing a tight cash position needs weekly detail instead. Our guide to the 13-week cash flow forecast covers that weekly version. The broader method sits in how to build a cash flow forecast.
How do you calculate the opening cash balance?
Take the bank statement balance, add deposits in transit, and subtract payments that have left the books but not yet cleared the bank. The result is reconciled cash, the only defensible starting point.
On December 31, the company’s bank statement shows $2,184,600. A customer payment of $11,250 was deposited but had not posted. Two vendor payments totalling $36,400 were released but had not cleared.
The opening balance is therefore $2,184,600 + $11,250 − $36,400 = $2,159,450. Starting from the raw statement figure would overstate cash by $25,150. That error would carry into every later month.
How do you forecast SaaS collections from monthly and annual plans?
Forecast each billing type on its own line, because each converts to cash on a different schedule. Card-paid monthly plans arrive almost immediately; invoiced annual plans arrive weeks later, and in lumps.
Monthly plans. Monthly recurring revenue is $38,500 in January and grows by $2,200 a month. Card processing costs are assumed at 3% of volume. January card receipts are $38,500 × 0.97 = $37,345, rising to $48,015 by June.
Annual plans. Annual contracts are invoiced in full at signing. History shows 70% of each month’s invoices are paid the following month, and 30% the month after that. December was a heavy month, with $180,000 invoiced as customers spent remaining budgets.
January’s annual collections are 70% of December plus 30% of November: $126,000 + $28,800 = $154,800. February drops to $91,800, and March to $66,600. Accounts receivable on December 31 was $208,800, which reconciles exactly to the cash those two months draw from it.
| Month | Annual invoices billed | Annual collections | Card receipts (net) | Total receipts |
|---|---|---|---|---|
| January | $54,000 | $154,800 | $37,345 | $192,145 |
| February | $72,000 | $91,800 | $39,479 | $131,279 |
| March | $120,000 | $66,600 | $41,613 | $108,213 |
| April | $60,000 | $105,600 | $43,747 | $149,347 |
| May | $84,000 | $78,000 | $45,881 | $123,881 |
| June | $66,000 | $76,800 | $48,015 | $124,815 |
Receipts swing from $108,213 to $192,145 while the business grows steadily. The swing is timing, not demand.
Why does deferred revenue make cash and revenue diverge?
Annual prepayments put cash in the bank before the service is delivered, so revenue trails cash. The forecast follows cash; the income statement follows delivery.
Under ASC 606, a 12-month subscription invoiced upfront is generally recognized as revenue ratably over the service period. Cash received before the service is delivered sits on the balance sheet as a contract liability, usually called deferred revenue.
December’s $180,000 of annual contracts adds $15,000 of revenue in each of the next 12 months. Most of that cash arrives in January alone. A founder who forecasts cash from the income statement will mistime $126,000 of January receipts.
The reverse error is equally costly. Booking a large annual deal can make the income statement look flat while the bank balance jumps. Diligence teams test exactly this reconciliation, as covered in how revenue recognition breaks SaaS diligence.
How do you forecast payroll, employer taxes, and benefits?
Forecast gross wages, then add employer taxes and benefits as separate lines. Unemployment taxes belong in the months they are incurred, which concentrates them early in the year.
Gross payroll for the 11 employees is $132,000 a month. The employer pays 6.2% Social Security tax and 1.45% Medicare tax, a combined 7.65% according to IRS Topic 751. That adds $10,098 a month, assuming no salary crosses the Social Security wage base. Employer-paid benefits run $850 per employee, or $9,350 a month.
Unemployment taxes behave differently. IRS Topic 759 sets the federal (FUTA) rate at 6.0% on the first $7,000 of each employee’s wages. An employer entitled to the full 5.4% state credit pays 0.6%, or $42 per employee.
State wage bases vary. The example assumes a 2.7% state rate on a $7,000 base. Every employee here earns $12,000 a month, so both bases are exhausted in January:
- Federal: 11 × $7,000 × 0.6% = $462.
- State: 11 × $7,000 × 2.7% = $2,079.
- January payroll cash: $132,000 + $10,098 + $9,350 + $2,541 = $153,989.
- February through June: $151,448 a month.
The amounts are small here. For a 40-person company with higher state rates, the January bump can reach tens of thousands of dollars. It recurs every year.
Which non-payroll lines belong in the forecast?
Every recurring vendor payment, plus each annual or quarterly bill in the month it is paid. Annual bills are the lines most often missed.
- Cloud hosting: $14,200 in January, rising $600 a month with usage, to $17,200 by June.
- Software subscriptions: $6,350 a month, plus annual renewals of $28,800 in January and $11,400 in April.
- Rent and coworking: $7,900 a month.
- Contractors and paid marketing: $18,500 a month.
- Accounting and legal: $9,500 a month.
- Insurance: a $21,600 annual premium for directors and officers and cyber coverage, paid in March.
The recurring lines total $42,250 a month before hosting. The three annual items add $61,800 across the half-year, concentrated in January, March, and April.
What does the full six-month forecast look like?
Combine receipts and payments by month, net them, and roll each closing balance into the next month’s opening balance. The table below is the complete model.
| Month | Opening cash | Receipts | Payroll | Hosting | Other payments | Net burn | Closing cash |
|---|---|---|---|---|---|---|---|
| January | $2,159,450 | $192,145 | $153,989 | $14,200 | $71,050 | −$47,094 | $2,112,356 |
| February | $2,112,356 | $131,279 | $151,448 | $14,800 | $42,250 | −$77,219 | $2,035,137 |
| March | $2,035,137 | $108,213 | $151,448 | $15,400 | $63,850 | −$122,485 | $1,912,652 |
| April | $1,912,652 | $149,347 | $151,448 | $16,000 | $53,650 | −$71,751 | $1,840,901 |
| May | $1,840,901 | $123,881 | $151,448 | $16,600 | $42,250 | −$86,417 | $1,754,484 |
| June | $1,754,484 | $124,815 | $151,448 | $17,200 | $42,250 | −$86,083 | $1,668,401 |
| Total | $829,680 | $911,229 | $94,200 | $315,300 | −$491,049 |
Check the model before trusting it. Opening cash less total net burn must equal June’s closing cash: $2,159,450 − $491,049 = $1,668,401. It does.
The pattern matters more than any single cell. January looks like the cheapest month, at $47,094 of net burn. March is the costliest, at $122,485, because the insurance premium lands just as annual collections dip. The spread between them is 2.6 times.
How do you turn the forecast into runway?
Divide closing cash by average monthly net burn over several months. One month is too noisy to use on its own in a business with annual billing.
Six-month net burn is $491,049, or $81,842 a month on average. June’s closing cash of $1,668,401 divided by $81,842 gives about 20.4 months of runway.
Using January alone would mislead badly. January closing cash of $2,112,356 divided by January’s $47,094 burn suggests 44.9 months. That figure is more than twice the real answer, and it would push a fundraise back by more than a year. Our guide to burn rate and runway explains why net burn, not gross burn, drives this calculation.
How should a seed-stage SaaS company stress-test the forecast?
Change one assumption at a time and measure how far runway moves. The two assumptions that matter most at seed stage are hiring dates and collection timing.
Hiring. Suppose two engineers join in April at $13,000 a month each. April payroll rises by $30,151: $26,000 of wages, $1,989 of employer FICA, $1,700 of benefits, and $462 of unemployment tax. May and June each rise by $29,689. June closing cash falls to $1,578,872.
The run rate changes more than the balance. June net burn becomes $86,083 + $29,689 = $115,772. Runway on that run rate is $1,578,872 ÷ $115,772, or 13.6 months. Two hires cut almost seven months of runway.
Collections. Suppose March’s $120,000 of annual invoices pays one month late. April receipts fall by $84,000, and the cash lands in May instead. June closing cash and runway do not change, yet April’s closing balance drops by $84,000 for a month. A company near a bank covenant floor would breach it.
Both stresses belong in the board pack. Kevin Cahill reviews each forecast scenario against the latest close before it reaches a board. The forecast is only as reliable as the close it starts from, which is the premise of the Continuous Close Method™. The cash flow forecast accuracy guide shows how to score the model once actuals arrive.
Frequently asked questions
How do you calculate the opening balance for a cash flow forecast?
Start with the bank statement balance, add deposits in transit, and subtract payments released but not yet cleared. In the worked example, $2,184,600 + $11,250 − $36,400 gives a reconciled opening balance of $2,159,450, which is $25,150 lower than the raw statement.
How do you calculate a cash flow forecast for a startup?
Begin with reconciled opening cash, project each receipt and payment line by month, and subtract payments from receipts to get net burn. Roll each closing balance into the next month. Runway equals closing cash divided by average net burn across several months, not a single month.
How do you forecast payroll, benefits, and payroll-tax timing?
Forecast gross wages, then add employer Social Security at 6.2% and Medicare at 1.45%, plus employer-paid benefits. Place federal and state unemployment taxes in the months wages first reach each wage base, which for most salaried staff is January.
How should annual prepayments and deferred revenue appear in the forecast?
Annual prepayments appear as receipts in the month the customer pays, not spread over the contract. Under ASC 606 the revenue is generally recognized ratably, so deferred revenue holds the difference. The forecast follows cash; the income statement follows delivery.
How do you forecast collections when customers pay on net-30 terms?
Use actual payment history rather than the invoice terms. If 70% of invoices are paid the following month and 30% the month after, apply those percentages to each month’s billings. Then confirm the projected collections reconcile to the opening accounts receivable balance.
