How to Do Cash Flow Projections

by Jack Ori; Updated September 26, 2017

Your business' cash flow measures how much cash moves in and out of your business each month. Cash flow differs from a simple income/expense report in that cash flow deals only with the actual revenue going in and out and does not account for credit or other non-cash transactions. Project your cash flow on a regular basis to anticipate and solve any problems and plan your business finances.

Step 1

Examine your budget. Look at the sources of income you expect for the year and determine how you will split that income over each month of the year.

Step 2

Make a column on a piece of paper or in your spreadsheet software for each month. Write down the expected income from each source for each month. For example, if you expect money from a grant in January, February and March but not the rest of the year, write how much grant money you expect in the columns for January, February and March. Add the expected income for each month and record the total under the column for that month.

Step 3

Skip a line and begin tracking your anticipated expenses. If you have fixed expenses, such as rent on your office space or salaries for executive employees, list the same amount under each month for that expense. For example, if you pay an executive $5,100 per month, list that expense under the column for each month of the year. Add the expected expenses for that month and record the total under the column for that month.

Step 4

Subtract the total expected expenses from the total expected income to determine your projected cash flow for that month.

Step 5

Plan to resolve problems. If your cash flow projection for a particular month is negative, decide how to handle the problem ahead of time. For example, you may use your line of credit or do extra fundraising before that month to increase your cash flow.

Step 6

Recalculate your cash flow projection on a monthly or quarterly basis to make sure you have the most accurate data.

About the Author

Jack Ori has been a writer since 2009. He has worked with clients in the legal, financial and nonprofit industries, as well as contributed self-help articles to various publications.