1. What Is a Cash Flow Projection?
A cash flow projection estimates the money your business expects to receive and spend over a future period, usually monthly or quarterly. It helps ensure you can meet financial obligations and plan for growth.
2. Why Use a Cash Flow Projection Format?
- Tracks inflows and outflows in real-time
- Identifies cash shortages early
- Assists with funding and budgeting decisions
- Provides clarity for investors and lenders
- Keeps operations smooth and financially secure
3. Standard Cash Flow Projection Format
A typical cash flow projection includes:
- Opening Cash Balance
- Cash Inflows (e.g., sales, investments, loans)
- Cash Outflows (e.g., rent, wages, supplies)
- Net Cash Flow (Inflows – Outflows)
- Closing Cash Balance (Opening + Net Cash Flow)
4. Example Monthly Cash Flow Projection Format
| Month | Opening Balance | Cash Inflows | Cash Outflows | Net Cash Flow | Closing Balance |
|---|---|---|---|---|---|
| January | £5,000 | £10,000 | £7,000 | £3,000 | £8,000 |
| February | £8,000 | £12,000 | £9,000 | £3,000 | £11,000 |
| March | £11,000 | £9,000 | £8,500 | £500 | £11,500 |
5. Key Components to Include
- Revenue/Sales Forecast
- Customer Payments (Receivables)
- Operating Costs (rent, salaries, utilities)
- Capital Expenditures (equipment, upgrades)
- Loan Repayments
- Tax Payments
- Contingency or Emergency Funds
6. Tools for Creating a Cash Flow Projection
- Microsoft Excel or Google Sheets (with formulas)
- Accounting Software (QuickBooks, Xero, FreeAgent)
- Business Loan or Grant Applications (often include built-in templates)
7. Best Practices for Accuracy
- Base figures on realistic assumptions
- Update projections monthly or quarterly
- Use past financial data as a guide
- Track seasonal trends or demand shifts
- Build in a buffer for unexpected costs
Frequently Asked Questions
What is a cash flow projection format?
It’s a structured table or spreadsheet showing expected cash in and out over a set period.
How long should my cash flow projection cover?
Typically 12 months. Short-term (monthly) and long-term (annually) formats are both useful.
Can I use a template?
Yes, many free templates are available through business support sites, Excel, or accounting platforms.
Do banks or lenders require a cash flow projection?
Yes, it’s often essential when applying for business loans or funding.
What’s the difference between cash flow forecast and projection?
They are often used interchangeably, but forecasts may be broader or less detailed than projections.
Should I include VAT in the cash flow projection?
Yes, include VAT if it affects cash inflows or outflows (especially for quarterly payments).
Conclusion
Using a standard cash flow projection format helps small businesses anticipate financial needs, avoid cash shortfalls, and plan strategically. Whether you’re applying for funding or managing daily expenses, a clear projection is essential for financial health.