Projected Cash Flow Statement

April 13, 2006

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Your projected cash flow is very important to most lenders because it provides an indication of whether you will have enough cash to pay your suppliers, vendors, and other creditors on time (not to mention the lender itself!). This information also functions as a planning tool for you. If your cash flow estimates show that you will occasionally not have enough money to pay your bills, you can arrange in advance for other sources of funds to get you through cash flow crunches.

You determine your cash flow by taking your inflows of cash (cash you're receiving) and subtracting your outflows of cash (cash you're paying out).

While you may present this information in any format you choose, we recommend that you use the format given in the cash flow budget worksheet provided in Business Tools. This worksheet provides a comprehensive listing of most inflows and outflows of cash you will encounter in your business. In addition, it presents this information to you and your audience in a simple and concise fashion.

If you are preparing a cash flow budget worksheet for an existing business, you can base your estimates of cash sources and uses on historical information. On the other hand, if you're a startup business, you should base your estimates of cash sources and uses on the revenues and expenses listed in the projected profit and loss statements. Accordingly, we recommend that you review the projected profit and loss statement section and complete a projected profit and loss statement before completing the cash flow budget worksheet.