While profit shows what you earned on paper, cashflow reveals the actual money moving through your restaurant. Too many restaurant owners end busy months wondering where their cash disappeared. Smart cashflow tracking prevents these financial mysteries and keeps you in control.
What exactly is cashflow?
Cashflow isn't profit - it's about timing. When does money actually hit your account? When do bills get paid? You might show profit on your books while struggling to pay suppliers because customers haven't settled their invoices yet.
💡 Example:
Restaurant with €50,000 revenue in March:
- Cash payments: €35,000 (immediate)
- Card payments: €15,000 (1-2 days delay)
- Business catering: €8,000 (30-day payment terms)
In March: €50,000 goes out the door, but February's €6,000 catering payment finally arrives
Calculate incoming cashflow
Track every euro that actually lands in your bank account this month:
- Cash revenue: Available immediately
- Card payments: Usually 1-2 days delay
- Credit card: Can take 2-5 days
- Outstanding invoices: From last month's catering orders
- Other income: Insurance payouts, government subsidies
⚠️ Note:
Only count money that's actually in your account. Sales and cash receipts are completely different numbers.
Calculate outgoing cashflow
Every payment leaving your account counts:
- Payroll: Wages, social security, holiday pay
- Supplier bills: Food, drinks, disposables
- Fixed expenses: Rent, utilities, insurance premiums
- Tax payments: VAT, income tax quarterly installments
- Debt service: Loan payments, equipment leases
- Capital expenses: Equipment purchases, renovations
💡 Example expenses March:
- Staff: €18,000
- Suppliers: €12,000
- Fixed costs: €8,000
- VAT payment Q4: €4,500
- New oven: €3,200
Total out: €45,700
Calculate cashflow position
The math couldn't be simpler:
Monthly Cashflow = Money In - Money Out
Positive means you're building cash reserves. Negative means you're burning through savings or need to tap credit lines. After managing kitchen operations for nearly a decade, I've seen too many profitable restaurants fail because they ignored this basic calculation.
💡 Complete March example:
Money in:
- March sales: €50,000
- February invoices paid: €6,000
- Total in: €56,000
Money out: €45,700
March cashflow: €56,000 - €45,700 = +€10,300
Create a cashflow forecast
Look ahead 90 days to avoid nasty surprises:
- Seasonal patterns: Summer rush vs. January slump
- Big bills: Quarterly VAT, annual insurance
- Slow periods: Revenue drops but rent stays the same
- Payment schedules: Equipment loans, mortgage payments
⚠️ Note:
Expect negative cashflow months and plan for them. Build cash reserves during good months or secure a line of credit before you need it.
Improve your cashflow
Struggling with cash flow? Here's how to fix it:
- Speed up collections: Require deposits on catering, offer cash discounts
- Delay payments: Negotiate 45-day terms with suppliers
- Reduce inventory: Don't tie up cash in excess stock
- Time investments: Spread equipment purchases across quarters
- Boost revenue: Targeted promotions, menu engineering
Daily revenue tracking with tools like KitchenNmbrs helps you spot cashflow problems before they become crises.
How do you calculate your monthly cashflow? (step by step)
Gather all income for this month
Add up: cash revenue, card payments (1-2 days delay), credit card payments (2-5 days), invoices from previous month that are now paid, and other income such as subsidies. Note: only money that actually reaches your account counts.
Sum up all expenses for this month
Make a list of: staff (wages + social contributions), suppliers, fixed costs (rent, energy, insurance), VAT payments, taxes, repayments and investments. Use your bank statements to make sure you don't forget anything.
Calculate your cashflow position
Subtract total expenses from total income. A positive number means money coming in, a negative number means a shortfall. Also make a forecast for the next 3 months to prevent surprises.
✨ Pro tip
Review your cashflow position every Tuesday for the past 7 days and forecast the next 14 days. This weekly rhythm catches problems while you still have time to adjust staffing, inventory, or payment timing.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What's the difference between cashflow and profit?
Profit is revenue minus expenses on your income statement. Cashflow is actual money moving in and out of your bank account. You can be profitable on paper while having cashflow problems if customers pay late or you make large equipment purchases.
How often should I calculate my cashflow?
Monthly at minimum, but weekly is better for restaurants. Daily tracking during slow seasons can help you catch problems early and adjust before cash runs out.
What if my cashflow is consistently negative?
You have a structural problem that needs immediate attention. Either raise prices, cut costs, or find additional financing. Consistently negative cashflow means your business model isn't working.
Should I include VAT in my cashflow calculations?
Absolutely. You collect VAT from customers (money in) and pay it to tax authorities later (money out). This timing difference significantly affects your cashflow, especially around quarterly payment dates.
How much cash buffer should I maintain?
Most restaurants need 2-3 months of operating expenses in reserve. This covers seasonal dips, unexpected repairs, and large tax payments without forcing you into expensive emergency financing.
Do credit card processing fees affect my cashflow calculation?
Yes, processing fees reduce your actual cash receipts. If you sold €1,000 but paid €25 in fees, only €975 hits your account. Always use net amounts in your cashflow calculations.
How do I handle seasonal cashflow swings?
Plan for them by building reserves during peak months and securing credit lines before slow seasons hit. Consider offering gift cards or prepaid packages during busy periods to smooth out cashflow throughout the year.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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