--- title: "Why cash at bank and current year earnings are calculated" url: "https://help.sherloc.elementaryb.com/en/article/why-cash-at-bank-and-current-year-earnings-are-calculated" language: "en" last_updated: "2026-10-05T21:41:57.163Z" --- # Why cash at bank and current year earnings are calculated Most figures in your forecast repeat your last closed month. Cash at bank and current year earnings can’t, as both are worked out from other figures, so we calculate them fresh in every month ahead. Here’s how, and what to check. ## Why these two are calculated Both figures arrive from your accounting software exactly as every other figure does: cash at bank from your balance sheet, current year earnings from your income statement. What neither arrives with is a way to carry it forward. Cash at bank is the figure that settles once everything else in the month has been accounted for, and current year earnings is a running total that has to be built up month by month. So we calculate both of them in every month ahead rather than repeating the last closed one. That is also what keeps your balance sheet balancing in months you haven’t reached yet: every month has to add up, and these are the two figures that make it add up. Nothing we do here changes the data in your accounts. Everything else works the way **Why your months repeat** describes. ## Cash at bank Accountants call the money you hold across your accounts “cash at bank”. Your accounting software reports it as a total, made up of every account you hold: current accounts, savings, foreign currency, whatever is there. A forecast needs one account to work from, and that’s your **operational bank account**: the account your day-to-day trading runs in and out of. We asked you to confirm which one that is during onboarding, so that’s the account we project. Your accounts are linked, so your total cash at bank moves with it. It’s calculated rather than repeated because every month has to add up: what comes in, what goes out, and what’s left sitting in the bank. Cash at bank is the figure that carries what’s left, so it depends on every other item in that month. On your balance sheet it sits on your operational bank account’s own line, which carries the account’s name, and the **How cash at bank is calculated** section of the forecast introduction explains how it’s built. Repeating one closing balance forward would carry last month’s working into a month it doesn’t describe, so we work it out month by month instead. **Why we asked which account you trade through** Your operational account is the one we forecast against, put each month’s surplus into, and reconcile your real figures against as each month closes. A savings account or a foreign currency account can’t do that job, which is why we asked you to name the one you trade through rather than picking one for you. **If it’s the wrong account** You can change it at any time. Go to **Settings > Company**, find **Operational bank account**, choose the account from the dropdown and select **Save**. The options are the bank accounts from your latest sync, so if you reconnect or resync you may need to choose it again. Cash at bank then recalculates against the account you choose. Your own accounting software may name these differently, as the labels in your chart of accounts won’t always match the ones used here. ## Current year earnings It can’t simply repeat month to month, so we calculate it from its parts: your income to date, plus any profit or loss so far this financial year. On your balance sheet it appears as **Current Year Earnings**, with **Retained Earnings** as its own line. ### It builds up through your financial year Each month adds that month’s profit or loss to the running total, carrying on from wherever your financial year had reached at your last closed month. ### It resets at your financial year end Your financial year end is the date shown in **Settings > Company** under **Financial end of year**, which sherloc takes from your accounting software. When your financial year ends, the running total moves across into retained earnings and current year earnings starts again from that month’s profit or loss alone. Retained earnings steps up once a year rather than every month. ### The starting figure stays visible Under current year earnings, the row labelled **Base** shows the figure we started from, taken from your last closed month, so you can see what the calculation began with. ## What to check ### Is cash at bank using the right operational account? If your day-to-day trading has moved to a different account, change it under **Settings > Company > Operational bank account**. Everything built on your cash position (runway included) follows the account you choose. ### Does the starting figure look right? Current year earnings builds on your last closed month, shown on the **Base** row. If it doesn’t look like the figure in your accounts, check that your last closed month is the one you expect before you plan against it. ### Is your financial year end right? Current year earnings starts again when your financial year ends, so if the year end is wrong the reset lands in the wrong month and retained earnings steps up at the wrong point. If it needs to change, change it in your accounting software and sherloc picks it up from there. ## Worked examples Round numbers in both, to show the shape rather than real figures. Cash at bank, month by month A business ending its last closed month on £55,000, taking £40,000 a month and spending £35,000. | Month | Money in | Money out | Cash at bank | What happened | | --- | --- | --- | --- | --- | | August | £40,000 | £35,000 | £55,000 | Your last closed month, straight from your accounts. | | September | £40,000 | £35,000 | £60,000 | Money in and out repeat August. Cash at bank doesn’t repeat. It carries on from £55,000 and adds the £5,000 left over. | | October | £40,000 | £35,000 | £65,000 | The same £5,000 lands again, on top of the higher balance. | | November | £40,000 | £52,000 | £53,000 | An assumption puts an annual bill of £17,000 in this month. More goes out than comes in, so cash at bank falls. | | December | £40,000 | £35,000 | £58,000 | Back to the repeated month, carrying on from November’s lower balance rather than October’s. | Set an assumption anywhere in the month and cash at bank answers to it, because it’s built from everything else rather than repeated. Current year earnings through a financial year A financial year of twelve months, with a profit of £5,000 a month. The month numbers show the shape; the exact month the reset lands in follows your own financial year end. | Month | Profit that month | Current year earnings | What happened | | --- | --- | --- | --- | | Month 1 | £5,000 | £5,000 | First month of the financial year, so the running total starts here. | | Month 2 | £5,000 | £10,000 | Each month adds to the total rather than replacing it. | | Month 3 | £5,000 | £15,000 | | | … | … | … | | | Month 12 | £5,000 | £60,000 | Twelve months have accumulated by the end of the financial year. | | When the year ends | £5,000 | £5,000 | The £60,000 moves into retained earnings and current year earnings starts again from a month’s £5,000. | Both figures work the same way in principle: they are calculated in every month rather than repeated. What differs is what goes into them.