The annual cash flow projection should be prepared while you are working on your annual operating budget. Many companies prepare a budget, but don't take the time to look at the cash picture. They think that if they know their bank balance, and how much they expect to sell each month, everything will be fine.
Many small businesses (and some of the big ones too) have, or nearly have, run out of funds at one time or another. Growing businesses are caught off guard even more than start-ups. Cash flow planning will help you see potential cash problems so that you can plan around them.
Many business owners and accountants will start the projection with budgeted net profit or loss and then adjust for non-cash items (such as depreciation expense) and then adjust for timing differences (e.g. insurance premiums or property taxes that are charged to expense each month, but only paid once per year).
If you are preparing projections for a loan package or other financing, you will want to make sure that your income statements, balance sheets and cash flow statements reconcile. You may want to consult with an accountant to review your projections.
Here is a handy Worksheet for an Annual Cash Flow Projection.