Cash Flow Projection Free Document Template

What is cash flow projection?

A cash flow projection is a forecast of cash funds a business anticipates receiving and paying out throughout the course of a given span of time, and the anticipated cash position at specific times during the period being projected.

Cash Flow Projection Template

Why creating a cash flow projection?

The purpose of preparing a cash flow projection is to determine shortages or excesses in cash from that necessary to operate the business during the time for which the projection is prepared. If cash shortages are revealed in the project, financial plans must be altered to provide more cash until a proper cash flow balance is obtained. For example, more owner cash, loans, increased selling prices of products, or less credit sales to customers will provide more cash to the business. Ways to reduce the amount of cash paid out includes having fewer inventories, reducing purchases of equipment or other fixed assets, or eliminating some operating expenses. If excesses of cash are revealed, it might indicate excessive borrowing or idle money that could be “put to work.” The objective is to finally develop a plan which, if followed, will provide a well-managed flow of cash.

How to use Cash Flow Projection Free Document Template

For the purpose of this projection free document template, cash funds are defined as cash, checks, or money order, paid out or received. Typically, cash flow activities are divided into 3 categories: Operating, Investing and Financing Activities.
The cash flow projection worksheet in this file provides a systematic method of recording estimates of cash receipts and expenditures, which can be compared with actual receipts and expenditures as they become known. The entries listed in the spreadsheet will not necessarily apply to every business, and some entries may not be included which would be pertinent to specific businesses. Adapt the spreadsheet to the particular business for which the projection is being made, with appropriate changes in the entries as required. Before the cash flow projection can be completed and a pricing structure established, it is necessary to know or to estimate various important factors of the business, for example:

  • What are the direct costs of the product or services per unit?
  • What are the monthly or yearly costs of the operation?
  • What is the sales price per unit of the product or service? Determine that the pricing structure provides this business with reasonable breakeven goals when conservative sales goals are met.
  • What are the available sources of cash, other than income from sales; for example, loans, equity capital, rent, or other sources?

To complete the cash flow projection using this template:

  • Populate all applicable cells in both the Income Statement worksheet and the Balance Sheet worksheet. Cells that require your input are highlighted with PINK.
  • If this is a new business, or an existing business undergoing significant changes or alterations, complete the cash flow column marked “Pre-start-up Position” in COLUMN B of the Cash Flow Projection worksheet. Pre-Start-up costs may include: rent, telephone, and utilities deposits before the business is actually open. Other items might be equipment purchases, alterations, owner’s cash injection, and cash from loans received before actual operations begin.
  • The Cash Flow Statement worksheet will automatically calculate and provide you with a cash flow categorized by Operating, Investing and Financing activities, based on your inputs.

Analyzing cash flow projection

  • The cash position at the end of each month should be adequate to meet the cash requirements for the following month. If too little cash, then additional cash will have to be injected or cash paid out must be reduced. If there is too much cash on hand, this money is not working for your business.
  • The cash flow projection, the profit and loss projection, the breakeven analysis, and good cost control information are tools which, if used properly, will be useful in making decisions that can increase profits to insure success.
  • The cash flow projection becomes more useful when the estimated information can be compared with actual information as it develops. It is important to follow through and complete the actual columns as the information becomes available. Utilize the cash flow projection to assist in setting new goals and planning operations for more profit. A suggested way to do this is to enter actual cash receipt amounts and cash paid out amounts in the “Actual” spreadsheet included in this file.

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