Blog · Forecast and pipeline · Software
Build a subscription cash forecast from billing, customer collection dates and operating payments. A worked example separates annual prepayments from revenue and shows how a delayed renewal changes cash headroom.
A SaaS cash flow forecast schedules customer collections and operating payments on the dates cash is expected to move. Bookings and recognized subscription revenue are inputs to other views, not substitutes for bank receipts. Annual prepayments make that distinction especially important when assessing funding needs.
A signed order establishes a commercial commitment. An invoice establishes a billed amount. Recognized revenue reflects the service delivered under the company's accounting policy. A collection changes bank cash. Those events can fall in different periods, and the forecast must keep their dates separate.
The SEC's financial statements guide distinguishes a company's reported profit from whether it generated cash. Apply that distinction when reading subscription growth: an expanding revenue base can coexist with a cash shortfall if collections arrive after payroll and hosting payments.
For example, assume a company bills and collects $120,000 on December 1, 2026, for an evenly delivered service running through November 30, 2027. Under the example's supplied straight-line recognition schedule, monthly revenue is 120,000 / 12 = $10,000. December and January recognize $20,000 together, leaving $100,000 of the advance unrecognized at January's end. The cash forecast includes the $120,000 receipt once, in December. The accounting team must confirm the appropriate recognition schedule for real contracts.
Use the general cash flow forecast for the complete company roll-forward. A SaaS cash flow statement explains historical cash movements; the forecast below concentrates on future billing and collection assumptions.
Start with bank cash reconciled to the forecast cutoff. Export open receivables with invoice ID, customer, outstanding amount, due date and the collections team's expected receipt date. Add future subscription billings with contract reference, billing frequency, renewal date, amount and expected collection delay.
Keep billed receivables and future billings in separate source groups. Once a planned invoice is issued, replace its forecast record with the actual invoice rather than retaining both. Keep lost renewals, unsigned expansions and disputed invoices visible as explicit assumptions instead of quietly setting them to zero.
For outflows, bring payroll and tax payment dates, hosting commitments, vendor invoices, commissions, debt service and capital purchases. A sales commission expense accrual and its later payment must not both become cash outflows. Assign a responsible owner to uncertain dates: collections for customer receipts, procurement for supplier commitments, and finance for financing assumptions.
A 13-week cash flow layout helps when monthly totals conceal an early payroll payment before a late renewal receipt. Use months for the example, then move to weeks or payment dates when headroom is narrow.
A US subscription company starts November 2026 with $300,000 of available cash. Its opening receivables total $90,000, scheduled as $30,000 of collections in each month. All current monthly subscriptions are assumed collected in their service month. The annual receipts column includes existing smaller renewal cohorts and the $120,000 December contract described above.
| Cash row (USD) | November | December | January |
|---|---|---|---|
| Monthly subscription collections | 60,000 | 60,000 | 60,000 |
| Annual subscription collections | 40,000 | 160,000 | 40,000 |
| Collections of opening receivables | 30,000 | 30,000 | 30,000 |
| Total receipts | 130,000 | 250,000 | 130,000 |
| Payroll and payroll taxes | 100,000 | 100,000 | 100,000 |
| Hosting payments | 20,000 | 25,000 | 30,000 |
| Other operating payments | 30,000 | 30,000 | 30,000 |
| Total payments | 150,000 | 155,000 | 160,000 |
| Net cash movement | -20,000 | 95,000 | -30,000 |
| Opening cash | 300,000 | 280,000 | 375,000 |
| Closing cash | 280,000 | 375,000 | 345,000 |
With row labels in A1:A12 and November in B, the column header is row 1, monthly collections are row 2, and closing cash is row 12. Total receipts in B5 are:
=SUM(B2:B4)
Use =SUM(B6:B8) in B9 for payments, =B5-B9 in B10 for net movement and =B11+B10 in B12 for closing cash. Enter the initial opening balance in B11 and =B12 in C11 for December's opening. Fill the formulas across, linking each subsequent opening to the preceding closing. The three-month identity is $300,000 + $510,000 receipts − $465,000 payments = $345,000 closing cash. Whole-dollar inputs make rounding unnecessary here.
To derive monthly collections from an export, put expected receipt dates in Collections!C2:C5000 and outstanding amounts in D. On the summary sheet, B15 contains the month start and C15 the next month start:
=SUMIFS(Collections!$D$2:$D$5000,Collections!$C$2:$C$5000,">="&B$15,Collections!$C$2:$C$5000,"<"&C$15)
Microsoft's SUMIFS documentation explains summing a range under multiple conditions. Here the two conditions define the receipt month. Use separate source groups if you want the three receipt rows displayed above. Covirage is not affiliated with Microsoft.
Now delay only the $120,000 December annual collection until January. The contract amount and operating payments are unchanged. This is a timing scenario, not an assumed loss of the customer.
| Month | Base receipts (USD) | Delayed receipts (USD) | Payments (USD) | Base closing cash (USD) | Delayed closing cash (USD) |
|---|---|---|---|---|---|
| November | 130,000 | 130,000 | 150,000 | 280,000 | 280,000 |
| December | 250,000 | 130,000 | 155,000 | 375,000 | 255,000 |
| January | 130,000 | 250,000 | 160,000 | 345,000 | 345,000 |
Both scenarios finish with the same cash because they collect the same total. Their minimum month-end balances differ: $280,000 versus $255,000. Against a supplied $250,000 minimum, headroom falls from $30,000 to $5,000. Check intramonth dates before treating even that remaining margin as usable.
Runway needs another explicit assumption. If opening-receivable collections end after January, monthly subscription cash remains $60,000 plus $40,000 of annual cohort receipts, and payments stay $160,000, monthly burn is $60,000. January closing cash divided by that burn is 345,000 / 60,000 = 5.75 months. That diagnostic excludes future changes and the cash minimum; it is not a substitute for the dated schedule.
Bring a sample of your own billing, receivables and operating-payment exports, with supplied collection scenarios. Covirage maps the columns, and its tools compute and check the cash comparisons; the external AI model explains the results with every figure traced to its rows. Create a free Covirage account, then set up your business and bring your file.
See Covirage for SaaS sales teams for the supporting industry context.
Monthly recurring revenue measures subscription revenue on a monthly basis, while cash follows billing and collection dates. Annual invoices, payment delays, credits and failed collections create differences. Use the billing schedule and expected receipt dates to forecast cash.
An annual prepayment creates cash when the customer pays, while service delivery continues afterward. Schedule the receipt once and retain the future costs of serving that customer. Do not add the monthly revenue recognition entries as additional receipts.
Use the dated cash forecast to identify when available cash falls below the required balance. Cash divided by monthly net burn is a useful diagnostic only when the assumed burn is representative and there are no material collection or payment spikes.