How to Create a Cash Flow Projection

Cash flow projections are usually divided into months:

  • How much cash comes in each month?
  • How much cash will go out?

Cash projections usually have two components: Cash in and Cash out

  • Use sales forecast to project cash in
  • Include payment from accounts receivables
    • Examine past records
  • Include cash from outside sources
    • Loans
    • Interest on savings
    • Interest on investment
    • Owner’s capital contribution
  • The majority of cash going out of your business funds operations: making products or providing services and overhead expenses
    • Use operational and cost plan
    • Pay attention to payments in advance and accrued payments
  • Others include:
    • Cash for new equipment or other investments
    • Loan repayments
    • Tax payments
    • Owner’s withdrawals
  • Include production costs:
    • Paper
    • Ink
    • Salary
    • Employee insurance
  • Include overhead:
    • Admin staff salaries, delivery, packaging, stationery, telephone and Internet, license fee, interest expenses, utilities, rent

The final output should be your cash flow projection:

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