![]() ![]() Record anticipated receivables in the months you expect them to be paid. The key to doing this successfully is recording receipts in the months you actually expect to get the money, not the month a sale is made. Record cash sales, credit card sales, collections from credit accounts, and any interest income. This amount is your “cash on hand.” In succeeding months, the ending cash balance from one month will be carried over as the beginning cash balance of the next month. The following step-by-step process will guide you through preparation of a cash flow projection: Step 1: Cash on handĬount your cash at the beginning of the first month of your projection. In addition, should you decide to seek a loan, banks will ask to see one-year cash flow projections by month, and three- to five-year projections by quarter. Also, a cash flow projection can help you spot sales trends, tell you if your customers are taking too long to pay, and help you plan for major asset purchases. It will help you anticipate shortfalls in time to do something about them, protecting you from a cash flow crisis. A well-prepared cash flow projection will allow you to plot anticipated cash flow positions over time. This forecast takes into account the lag time between billing your clients and getting paid incurring an expense and paying for it and collecting taxes that aren’t due to the government until a later date. A cash flow projection charts the amounts of money your business expects to receive and pay out each month in a rolling six- or 12-month period. An accurate cash flow projection can protect entrepreneurs against this situation. Cash flow problems often catch small business owners by surprise. ![]()
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