Free Cash Flow Forecasting Template

Download your copy of the cash flow forecasting and projection template for small businesses.

Screenshot example of a cash flow forecasting template for small businesses
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How to Prepare a Cash Flow Projection

For your convenience, Clout Advisory has prepared a template to help you create a cash flow projection for your business for the next 12 months. To use this template effectively, follow these steps:

  1. You start with an opening bank balance – the current amount of cash on hand.
  2. Then add all the cash inflows from different sources.
  3. Next, deduct the cash outflows for each period. We have prepared multiple aspects of business expenses to be aware of.
  4. The number at the end of each period is referred to as the closing cash balance. This will be the opening cash balance for the next period.

Once your cash flow forecast is complete and the period passes, go back and compare the estimated amounts against the actual cash flows for the period.

This is essential as any differences between estimated and actual can highlight discrepancies and create more accurate projections for the following months.


Business Budgeting Vs. Cash Flow Projections

As a business owner, effectively managing your finances is crucial for ensuring consistent profitability and cash flow throughout the year. While creating a budget for the upcoming financial year is a common practice, it may not address potential cash flow issues that could arise during the year.

This is where a cash flow projection comes in. Unlike a budget that focuses on projecting profits, a cash flow projection provides insight into the business’s cash position at any given time. By staying on top of your cash flow, you can identify potential cash shortages and take action to address them before they become a problem.

In essence, a budget will tell you about your expected profit position, while a cash flow projection will tell you how much money you can expect to have available in your bank account. By accurately predicting your cash flow, you can make informed decisions about financial matters such as investments and expenses, leading to increased profitability and overall business success.

Taking the time to regularly review your cash flow projections can help you plan for any potential cash flow issues, allowing you to prepare and make informed decisions that can ultimately benefit your business in the long run.

What is Cash Flow?

Cash flow is the money that goes in and out of your business. The literal ‘flow’ of the business’s cash.

A cash flow projection estimates how much free cash will be on hand by calculating the cash coming in from sales or services and going out based on past business performance.

When you are making forecasts, it is important to use realistic estimates. This will usually involve looking at last year’s results and combining them with economic growth, and other factors unique to your line of business.

However, sales figures can change all the time depending on the following:

  • Your customer base and how quickly they pay you.
  • Changes in the economy, such as interest rates and unemployment rates.
  • What your competitors are doing.
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