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Projecting Your Business Cash Flow, Made Simple

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Projecting Your Business Cash Flow, Made Simple

By Caron_Beesley, Contributor
Published: July 30, 2012 Updated: September 28, 2016

Cash flow is king for small businesses and the self-employed. But planning cash flow is easier said than done, especially if you’re not a numbers person.

However, if you’re going to succeed in business, mastering basic cash flow projections is a must. After all, you can be a profitable business yet still have poor cash flow, simply because the cycle of cash in and out of your business isn’t synchronized.

So where do you start? The first thing to know is that your projections don’t have to be – and probably never will be – 100 percent accurate. It’s one of the reasons many business owners hesitate working through this process.  But it is possible to simplify the process. Here’s how:

Cash Flow is About Timing

It’s important to understand that the timing of cash income and cash outgo comes down to the operating cycle of your business. This cycle includes many moving parts, such as buying or selling with credit, your collection process, the costs of running your business (salaries, rent, marketing, etc.) and, of course, when you get paid.

Why Manage Cash Flow Through Projection?

Using a basic spreadsheet as your tool, cash flow projection gives you a clear look at when money comes in, when it goes out and what money you are left with at the end of each month after you have paid your expenses and recorded your income.

Knowing your numbers in terms of cash flow projection allows you to plan and anticipate for the coming months.  It also gives you enough information to see potential pitfalls within the cash-in and cash-out flow of your business. This might involve a short-term injection of cash from family, friends or a bank. Remember, you’ll need to share this kind of projection document if you want to secure a loan and prove your ability and timeline for making your loan repayments – another good reason to spend some time on this document.

What Does a Cash Flow Projection Spreadsheet Look Like?

SCORE offers small business owners a wide selection of free business templates for download, including a sample cash flow projection spreadsheet template (with formulas built in for those of us who are spreadsheet illiterate). Look for the download labeled Cash Flow Statement (12 months).

Try to think of cash flow projection as part of your ongoing business planning process. And although this document and the process itself is not a function of accounting, all your numbers and tracking categories should be in sync.

If you’re unsure how to forecast your sales or expenses, business planning pro Tim Berry has broken this down into a simple process, too. Read his blog – How to Project your Basic Business Numbers – for a step-by-step guide.

Lastly, if cash flow is a problem, it might be worth talking to your accountant. There are a number of options available before you dive into borrowing money. Read more about these in this article: 5 Things to talk to your Accountant About, by Barbara Weltman.

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About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


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Planning on opening small restaurant, I don't have any background in business, any advice please? Thank you.
Well said Carol, the main problem though for the start ups or people who are new in it is that they don't have any idea how it works. If someone from science background want to start a business it's always very difficult for them to keep up with these things.
The SCORE templates are helpful when putting together your financial projections. Frankly, you are being very shortsighted to not put together a budget and forecast the growth rate of the company. Many people get caught up in the moment, only to be hurt down the road.
"Lastly, if cash flow is a problem, it might be worth talking to your accountant. There are a number of options available before you dive into borrowing money." - Agree. Borrowing is often very risky.
Cash-flow projections easy? That is impossible. But SCORE does provide some excellent templates that make the process a bit easier. But unfortunately there is nothing out there that I know of that makes it easy!
Having accounts in days is good for small business.
For small retailers having a promotional sale in the fall is a great way to get new customers for Christmas season and increase your cash flow.
As long as you have a good plan at hand, it will surely show you the possible cash flow of your business and even determining how much could you earn in the long run.
I think projecting your cash flow will help to foresee any issues that may arise.

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