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Excess Cash Flow Calculation Template

One document and four sheets that trace every addition and deduction to its own clause in the credit agreement.

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What you get

Pack of 5 files: 1 document, 4 spreadsheets

Excess Cash Flow Calculation Template
  • ECF Build-upSpreadsheet
  • Permitted DeductionsSpreadsheet
  • Prepayment ScheduleSpreadsheet
  • Historical ECFSpreadsheet
  • Calculation Basis NoteDocument

A generic Excess Cash Flow formula subtracts capex, cash interest, cash taxes and scheduled amortization from EBITDA, then multiplies by a flat percentage. One attorney and CPA's own breakdown of the mechanic confirms there is no accounting standard behind the term. Some agreements start from EBITDA and deduct interest and taxes separately. Others start from Consolidated Net Income, which already has both subtracted out, so applying the wrong base double-counts a deduction and every later number inherits the error.

The mechanics are real, not a modeling convention. CACI International's own October 2024 credit agreement sets its Excess Cash Flow Percentage at 50%, stepping to 25% once leverage falls to 3.00 times and to 0% below 2.50 times. Both tiers are tested fresh each fiscal year end, not carried forward, and net against voluntary prepayments already made that year. Talbridge Components, Inc., a fictional industrial manufacturer, closes FY2025 at 2.80 times leverage on $22,400,000 of EBITDA, dropping its own agreement's tier from 50% to 25%.

Talbridge's build-up nets $13,610,000 of additions against $5,570,000 of deductions, each lettered to its own clause, for $8,040,000 of Excess Cash Flow. Twenty-five percent of that is $2,010,000, less $750,000 already prepaid voluntarily, leaving $1,260,000 due. A generic calculation carrying last year's 50% forward and skipping the netting sends $3,545,000, a $2,285,000 overpayment. The pack builds the Calculation Basis Note and three sheets from the agreement's clauses, beside the lender covenant reporting package for the leverage math setting the tier.

Every clause, this year's tier, netted

The build-up, the deductions ledger, the prepayment it produces, and three fiscal years of the same calculation.

Excess Cash Flow Calculation Template
RiverECF Build-up

ECF Build-up

Talbridge Components, Inc., an illustrative industrial manufacturer. Fiscal year ended 31 December 2025.

LineDescriptionClauseAmount
AConsolidated Net Income1.01(a)7,150,000.00
BNon-cash charges added back1.01(b)5,540,000.00
CDecrease in working capital1.01(c)825,000.00
DNon-cash loss on disposition1.01(d)95,000.00
ESubtotal, additionsA-D13,610,000.00
FCapex paid in cash1.01(e)(3,150,000.00)
GScheduled principal payments1.01(f)(1,470,000.00)
HCash paid, permitted acquisition1.01(g)(610,000.00)
ICash taxes over the tax provision1.01(h)(340,000.00)
JIncrease in working capital1.01(i)0.00, not triggered
KSubtotal, deductionsF-J(5,570,000.00)

Percentage and netting

LineAmount
Excess Cash Flow, before percentage (E less K)8,040,000.00
First lien net leverage at FYE (62,720,000 / 22,400,000)2.80x
Applicable ECF Percentage this fiscal year25%
25% of Excess Cash Flow2,010,000.00
Less voluntary prepayments made in FY2025(750,000.00)
Mandatory ECF prepayment due1,260,000.00

Last fiscal year’s tier was 50%. Carrying it forward instead of retesting this year’s 2.80x leverage would overstate every dollar figure below it.

RiverPermitted Deductions

Permitted Deductions

Every addition and deduction resolved to the clause that permits it, not a template line.

ClauseItemAmountWhy it qualifies
1.01(a)Consolidated Net Income7,150,000.00The defined starting base already nets out interest and the tax provision.
1.01(b)D&A 4,900,000, equity comp 380,000, deferred tax 260,0005,540,000.00Only the items this clause names qualify, not every non-cash charge.
1.01(c)Decrease in working capital825,000.00Excludes GAAP reclassifications, purchase accounting effects and swap contract fluctuations.
1.01(e)Capex paid in cash(3,150,000.00)Net of any portion funded by new debt or new equity proceeds.
1.01(f)Scheduled principal payments(1,470,000.00)Excludes this same ECF prepayment and any revolver paydown without a permanent cut.
1.01(g)Bramwell Tooling Co. acquisition, cash portion(610,000.00)Cash consideration only; equity consideration would not reduce cash available for the sweep.
1.01(h)Cash taxes over the tax provision(340,000.00)Closes the gap between the provision in net income and cash actually paid.

Working capital only qualifies if the swing is real cash movement. Talbridge’s 825,000 decrease passes that test; a swing caused by a GAAP reclassification would not, under the same clause.

RiverPrepayment Schedule

Prepayment Schedule

The mandatory amount, how it is applied, and what a generic calculation would have sent instead.

ItemAmount
Mandatory ECF prepayment due1,260,000.00
Financial statements and compliance certificate due31 Mar 2026
Prepayment due, 10 business days after14 Apr 2026
Quarterly scheduled amortization payment367,500.00
Quarters of amortization the prepayment covers3 full, plus 42.86% of a 4th

Against a naive, no-clause-tracing calculation

MethodResult
Clause-traced, this year’s tier, netted1,260,000.00
EBITDA less capex, cash interest, cash taxes and amortization, times last year’s flat 50%, no netting3,545,000.00
Gap, sent to the lender for nothing2,285,000.00

The naive method is not a rounding error. It restates 7,090,000 of Excess Cash Flow instead of 8,040,000, carries a stale percentage, and skips netting the 750,000 already prepaid, each mistake compounding the next.

RiverHistorical ECF

Historical ECF

Three fiscal years, the tier each one set, and the running total actually paid.

Fiscal YearEBITDALeverageTierGross ECFVoluntaryMandatory Due
FY202318,900,0003.75x50%4,840,00002,420,000.00
FY202420,600,0003.35x50%6,760,000300,0003,080,000.00
FY202522,400,0002.80x25%8,040,000750,0001,260,000.00
Cumulative, FY23-FY256,760,000.00

Leverage fell from 3.75x to 2.80x across the three years and the tier stepped down once, from 50% to 25%. At 2.50x or below the tier drops to 0% and no further mandatory prepayment is owed under this clause, however large Excess Cash Flow runs.

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What's in the pack

01

ECF Build-up

Every addition and deduction lettered to its own clause in the credit agreement, not a generic EBITDA-minus-capex formula.

02

Permitted Deductions

A ledger of every addition and deduction with its supporting document and the reason it qualifies under that specific clause.

03

Prepayment Schedule

Nets voluntary prepayments dollar for dollar, then applies the balance against scheduled amortization and states the exact due date.

04

Historical ECF

Three fiscal years of leverage, the percentage tier each one set, and the cumulative mandatory prepayment total.

05

Calculation Basis Note

The number, the clause behind each line, and the gap a generic formula would have sent to the lender.

How to use it

  1. 1

    Take it blank, or worked

    Download the empty Word and CSV files with no signup, or open the pack in River and hand it the credit agreement and the annual accounts instead of building four sheets by hand.

  2. 2

    Send the agreement and the accounts

    The prepayment provision, every amendment, and the fiscal year's financial statements. That alone builds the additions and deductions with each one's own clause, not a guessed default.

  3. 3

    Set the percentage and net it

    River tests this year's leverage ratio against the step-down grid, applies the percentage that tier actually sets, and nets out whatever you already prepaid voluntarily during the year.

  4. 4

    Refresh it every fiscal year end

    Leverage moves, deductions change, and last year's percentage does not carry forward. Rerun the pack each fiscal year close so the mandatory prepayment always traces to this year's own numbers.

Frequently asked questions

Is this template free?

Yes. The whole pack comes down as a Word document and CSV sheets, no signup and no card. Edit with AI is the optional route for anyone who would rather hand River the credit agreement and the annual accounts than build four sheets from scratch. The rest of the library is at free templates.

What is the de minimis threshold, and does my facility actually have one?

Most sponsor-backed agreements set a dollar floor below which no prepayment is due even when the build-up is positive. CACI International's own facility sets that floor at $25,000,000. Talbridge's smaller illustrative facility sets it at $500,000. Skip the check, and a build-up that clears the floor looks the same as one that never should have owed anything.

Does every change in working capital count toward the addition or deduction?

Not automatically. CACI International's own credit agreement excludes working capital swings caused by a GAAP reclassification between current and noncurrent, purchase accounting effects, and fluctuations in accrued obligations under swap contracts, since none of those move cash. The pack tests each period's swing against the same kind of carve-out before it lands on the Permitted Deductions ledger.

What happens if I already prepaid voluntarily during the year?

It nets dollar for dollar against the mandatory amount, which is the step a generic formula skips. Talbridge prepaid $750,000 voluntarily against the same tranche during FY2025, so the $2,010,000 the percentage alone produces drops to the $1,260,000 actually due. Skip this step and the lender is overpaid by the full voluntary amount.

How does this connect to the EBITDA and leverage definitions I already certify?

Often from the same base. Run the credit agreement through the loan agreement EBITDA definition extractor first if the add-backs behind your leverage ratio are in dispute. The Applicable ECF Percentage tier and the leverage covenant are frequently keyed to the identical Consolidated EBITDA figure.

Where does the debt figure in the leverage ratio come from?

From every loan and lease on the books, each scheduled on its own agreement. The debt schedule and maturity pack keeps that register current, and its total funded debt is exactly the number a First Lien Net Leverage Ratio needs once a term loan amortizes or a new instrument is added mid-year.

Can I see the percentage step down before the fiscal year actually closes?

Yes. The covenant headroom forecast projects the same leverage ratio forward by quarter, so a borrower approaching a leverage breakpoint can see the tier drop coming before the year end rather than discovering it only when the audited financials are final.

Sources

  1. Cummings & Cummings LawHow to Structure “Excess Cash Flow” Sweeps in Loan Covenants (opens in a new tab)
  2. SECCACI International's own October 2024 credit agreement (opens in a new tab)

Written by

Chandler Supple

Co-founder & CEO, River

Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.

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Reviewed by

Brian Joseff, Co-founder, River

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Related workspaces

Lender covenant reporting pack

For the full covenant set the same leverage ratio feeds, alongside the Applicable ECF Percentage this pack computes from it.

Covenant headroom forecast

Projects the same leverage ratio forward by quarter, so a step-down in the ECF percentage is visible before the fiscal year closes.

Debt schedule and maturity pack

Keeps the funded debt total current across every instrument, the other half of the leverage ratio this pack's percentage tier depends on.

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Trace the sweep to the clause that actually requires it

Download the blank pack as a Word document and CSV files, or open it in River and let the agent build the calculation from your own credit agreement and financial statements.

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