Free Cash Flow Projection Template

Cash Flow Projection Template

Why You Need a Cash Flow Projection

Some of the biggest names in business can tell you why cash flow is so important:

“Never take your eyes off the cash flow because it’s the lifeblood of business.”

Richard Branson

“We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas.”

Michael Dell

“If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.”

Jack Welch

Benefits of a Cash Flow Projection

A cash flow projection provides many benefits to you:

Early identification of potential low (or negative) cash balances

The more time you have to make adjustments, the more adjustment options you have. A projection lets you know when you need to speed up cash collection or slow down payments to avoid a cash crunch.

Your bank, investors, or other stakeholders require it

They want assurance that your company has enough cash for operations to make payments to them. The very act of having a cash flow projection shows your business management skills and builds credibility with them.

Operations coordination

The timing of when to hire staff, make significant purchases, and distribute cash to owners can all be modeled to make sure your strategy is feasible. Not having a projection might cause you to make decisions or promises that you can’t fulfill.

Identify cash “leaks”

It’s easy for small things that suck cash out of the business to go unnoticed in daily operations. Reviewing the cash flow projection can show:

  • Lags between sales and cash receipt for those sales
  • Lags between the purchase of inventory and cash receipt on sales of that inventory
  • Opportunities to stretch out one set of payments to prioritize another set of payments.

Identify the need to get a loan or a capital infusion

The projection may say that operational cash flows will not be enough to fund opportunities for investment and growth. This means you may need additional cash from lenders or owners.

Avoid tax penalties

It’s not uncommon for bankers to see companies that are making sales but don’t have enough cash to pay the taxes on those sales.

You’re more ready for big cash outflows

Preparing the schedule helps you identify big cash outflows like payroll payments for which you may need some time to gather cash.

Plan out ownership equity distributions

A good cash flow projection for your company allows you to plan your equity distributions. This helps with your personal financial planning.

Capture Opportunities

Your projection tells you when you will be able to make major investments like equipment purchases. This lets you know when you can start looking for deals on these investments.

Capture Opportunities and Avoid a Cash Crunch with the Free Cash Flow Projection Template

There’s no need to spend hours creating your own template from scratch when you can quickly analyze your cash with this easy-to-use template. I also have a blog article titled How to Create a Cash Flow Projection that walks you step-by-step through building your projection with this template. You can start taking control of your cash flow today by downloading the free template.