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FM-03
Cash Flow Projection SCORE Chapter 570 |
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Cash Flow |
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A cash flow projection is
the most vital part of your business plan, particularly if you are
anticipating applying for financing assistance. You will be expected to
produce a 12-month cash flow projection, and possible quarterly cash flow
projections for the following 2 years A cash flow projection
will indicate if your proposed business will be able to meet its financial
commitments throughout the year, repay any loans, and produce a living wage
for yourself. Here are some of the
important points to keep in mind when preparing your projection: It will be necessary to do some basic research in order to provide accurate expense figures, especially in the area of rents, utilities, insurance, prevailing wages, fringe benefits, and other continuing expenses. Your projections of income must be conservative and based on some criteria which you can justify. It is not sufficient to just pull figures out of a hat. Remember it is CASH FLOW not profit or loss. If you will have accounts receivable they are entered only as they might be received, not when sale is made or service performed. The same applies to expenses; enter them when they will be paid. Do not average over the year. The pre-start-up column of the cash flow is important because it is usually during this period that some very heavy expenses occur and there is no income being produced. One important reason for producing an accurate cash flow projection is to determine the amount of working capital your business will require to maintain itself until it begins to produce a profit. Many people prefer to make several trial cash flow projections, one with the “worst case scenario”, one “probable scenario”, and one “best case scenario”. Try it. It could prove interesting. You
can download a workable cash flow below. ..\1
Score Documents\Cash Flow Disk\Cash Flow Demo.xls |
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