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Cash Flow Projection

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        Notes on Preparation
        Note: You may want to print this information to use as reference later. To delete these
        instructions, click the border of this text box and then press the DELETE key.

        Note: In the "Twelve Month Cash Flow" sheet, enter amounts only in the 'white' cells.
        Cells with a light blue colour are calculated automatically.

        Refer back to your Budget (Profit & Loss Projection). Line-by-line ask yourself when
        you should expect cash to come and go. You have already done a sales
        projection, now you must predict when you will actually collect from customers. On the
        expense side, you have previously projected expenses; now predict when you will
        actually have to write the check to pay those bills. Most items will be the same as on
        the Profit & Loss Projection. Rent and utility bills, for instance, are usually paid in the
        month they are incurred. Other items will differ from the Profit & Loss view. Insurance
        and some types of taxes, for example, may actually be payable quarterly or
        semiannually, even though you recognize them as monthly expenses. Just try to make
        the Cash Flow as realistic as you can line by line. The payoff for you will be an ability to
        manage and forecast working capital needs. Change the category labels in the left
        column as needed to fit your accounting system.

        Note that lines for 'Loan principal payment' through 'Owners' Withdrawal' are for items
        that always are different on the Cash Flow than on the Profit & Loss. Loan Principal
        Payment, Capital Purchases, and Owner's Draw simply do not, by the rules of
        accounting, show up on the Profit & Loss Projection. They do, however, definitely take
        cash out of the business, and so need to be included in your Cash plan. On the other
        hand, you will not find Depreciation on the Cash Flow because you never write a check
        for Depreciation. Cash from Loans Received and Owners' Injections go in the "Loan/
        other cash inj." row. The "Pre-Startup" column is for cash outlays prior to the time
        covered by the Cash Flow. It is intended primarily for new business startups or major
        expansion projects where a great deal of cash must go out before operations

        The bottom section, "ESSENTIAL OPERATING DATA", is not actually part of the Cash
        model, but it allows you to track items which have a heavy impact on cash. The Cash
        Flow Projection is the best way to forecast working capital needs. Begin with the
        amount of Cash on Hand you expect to have. Project all the Receipts and Paid Outs for
        the year. If CASH POSITION gets dangerously low or negative, you will need to pump
        in more cash to keep the operation afloat. Many profitable businesses have gone under
        because they could not pay the bills while waiting for money to flow in. Your creditors
        do not care about profit; they want to be paid with cash. Cash is the financial lifeblood
        of your business.


Definition: A cash flow projection is a forecast of cash funds a business anticipates receiving and paying out
throughout the course of a given time span, and the anticipated cash position at specific times during the period being
projected. [For the purpose of this projection, cash funds are defined as cash, cheques, or money order, paid out or

Objective: The purpose of preparing a cash flow projection is to determine shortages or excesses in cash from that
necessary to operate the business. 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 less inventory, reducing purchases of equipment or other fixed assets, or
eliminating some operating expenses. If excesses of cash are revealed, it might indicated excessive borrowing or idle
money that could be used more effectively. The objective is to finally develop a plan which, if followed, will provide a
well-managed flow of cash.

The Spreadsheet: 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. It is suggested, therefore, that you adapt the
spreadsheet to your business, 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 elements 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 [including a reasonable net profit] 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?

Procedure: Most of the entries for the cash flow spreadsheet are self-explanatory; however, the following
suggestions are offered to simplify the procedure:
a) If this is a new business, or an existing business undergoing significant changes or alterations, the cash flow part
of the column marked "Pre-start-up Position" should be completed. [Fill in appropriate blanks only.] Costs involved
here are, for example, rent, telephone, and utilities deposits before the business is actually open. Other items might
be equipment purchases, alterations, the owner's cash injection, and cash from loans received before actual
operations begin.
b) Next fill in the pre-start-up position of the essential operating data [non-cash flow information], where applicable.
c) Complete the spreadsheet t considering the proposed contents for each entry, given in the notes provided in the

a) 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.

b) 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.

c) The projection becomes more useful when the estimated information can be compared with actual information as
c) The 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.
Utilise 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.

These guidelines are adapted from a similar cash flow projection spreadsheet published by the site
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 al spreadsheet included
          Cash Flow (12 months)                                                                              Enter Company Name Here                                                    Fiscal Year Begins:             Jan 07
                                                                                                                                                                                                                      Total (end
                                           Pre-Startup   Jan 07       Feb 07       Mar 07       Apr 07        May 07       Jun 07       Jul 07       Aug 07       Sep 07       Oct 07       Nov 07       Dec 07
                                                                                                                                                                                                                       of year)
          Cash on Hand (beginning of
1.                                                                0            0            0            0             0            0            0            0            0            0            0            0            0

2.        INCOME
     a)   Cash Sales

     b)   Other income (credit accounts)

     b)   Loan / other cash injections

3.        TOTAL CASH RECEIPTS                        0            0            0            0            0             0            0            0            0            0            0            0            0            0
          Total Cash Available (before
4.                                                   0            0            0            0            0             0            0            0            0            0            0            0            0            0
          cash out)

5.        CASH PAID OUT
     a)   Purchases (goods for sale)

          Purchases (specify)

          Purchases (specify)

     b)   Wages (exact withdrawal)

     d)   Holiday pay

     e)   Tax deduction (on wages)

     f)   Payroll tax

     g)   External services

     h)   Supplies (office & oper.)

     i)   Repairs & maintenance

     j)   Marketing, advertising

     k)   Car, delivery & travel

     l)   Accounting & legal

     m) Rent

     n)   Telephone, postal expenses

     o)   Utilities

     p)   Insurance

     q)   Taxes (real estate, etc.)

     r)   Interest

     s)   VAT

     t)   Other expenses (specify)

          Other (specify)

          Other (specify)

     u)   Miscellaneous

          SUBTOTAL                                   0            0            0            0            0             0            0            0            0            0            0            0            0            0

     v)   Loan down payment

     w) Capital purchase (specify)

     x)   Other startup costs

     y)   Reserve and/or Escrow

     z)   Owners' Withdrawal

6.        TOTAL CASH PAID OUT                        0            0            0            0            0             0            0            0            0            0            0            0            0            0

7.        Cash Position (end of month)               0            0            0            0            0             0            0            0            0            0            0            0            0            0

          ESSENTIAL OPERATING DATA (non cash flow information)
          Sales Volume

          Accounts Receivable

          Bad Debt (end of month)

          Inventory on hand (eom)

          Accounts Payable (eom)

                                                         Cash flow Chart

                                   Cash Flow (12 Months)










    Jan 07   Feb 07   Mar 07    Apr 07      May 07     Jun 07         Jul 07   Aug 07    Sep 07    Oct 07     Nov 07   Dec 07

                        Cash Position (end of month)     TOTAL CASH RECEIPTS            TOTAL CASH PAID OUT

                                                             Page 8