The worksheet shown below subdivides the cash flow projection into three components: operating cash flow; investing cash flow; and financing cash flow. This approach shows cash generated from operations separate from non-operating activities and from external sources. You need to know and understand operating cash flow. Many lenders and investors will want to see these elements separated. Another approach is to separate cash receipts from cash paid out, whether from internal or external sources.
| Description/Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
| Cash Balance, Beginning of Period | ||||||||||||
| Operating Cash Flow | ||||||||||||
| + Revenue collected (sales) | ||||||||||||
| + Other income | ||||||||||||
| - Purchases/Materials | ||||||||||||
| - Salaries | ||||||||||||
| - Payroll Taxes | ||||||||||||
| - Employee Benefits | ||||||||||||
| - Rent | ||||||||||||
| - Utilities | ||||||||||||
| - Telephone | ||||||||||||
| - Advertising and Promotions | ||||||||||||
| - Office Supplies and expenses | ||||||||||||
| - Insurance | ||||||||||||
| - Legal and Accounting | ||||||||||||
| Subtotal: Cash from by Operations | ||||||||||||
| Investing Cash Flow | ||||||||||||
| +/- Purchase/Sale of Equipment | ||||||||||||
| +/- Investments in Securities/Time Deposits | ||||||||||||
| +/- Other noncurrent assets | ||||||||||||
| Subtotal: Investing Cash Flow | ||||||||||||
| Financing Cash Flow | ||||||||||||
| +/- Proceeds from Loans/Payments on Loans | ||||||||||||
| +/- Sale of Capital Stock/repurchase of stock | ||||||||||||
| +/- Dividends Paid | ||||||||||||
| Subtotal: Financing Cash Flow | ||||||||||||
| Total Cash Flow During Period | ||||||||||||
| Cash Balance, End of Period | ||||||||||||
Instructional Notes
Description/Month:
The Annual Cash Flow plan is prepared on a monthly or quarterly
basis. For most businesses, it is best to prepare a monthly plan. At the end of
each month, you should compare estimates to actual cash receipts and
disbursements.
Cash Balance, Beginning of Period:
You will need to estimate what your cash balance will
be at the beginning of the projection period.
Operating Cash Flow:
Include all sources of operating
cash flow under this section. The worksheet does not include all of the
possible categories that you may want to use -- adapt the worksheet as required
to meet your business and planning needs.
+ Revenue collected (sales)
Include both cash sales and the estimated collections of accounts receivable. If you cannot accurately estimate your sales, you will have a difficult time determining the amount of cash required to operate your business. If your business, is new, start with a 2-4 month projection. Of course if you are applying for a loan, you will most likely be required to prepare a 12 month cash flow forecast.+ Other income
Any miscellaneous sales or operating income goes in this line. Do not include proceeds from sales of equipment or other non-operating sources.- Purchases/Materials
Amounts you expect to pay for cost of goods sold. If you purchase in bulk or have seasonal business, make sure your cash outlays reflect this.- Salaries
Don't forget to change this line for any increases or bonuses that you anticipate. If you separate the employees portion of payroll taxes and include it separately, this will be the net cash amount you pay. For additional explanation, read about payroll entries.- Payroll Taxes
Some employees may reach the limits for unemployment taxes or FICA -- be sure and adjust this line accordingly. And don't forget to include the employees portion of payroll taxes if you put the net check amount on the salary line.- Employee Benefits
If you have a pension, retirement or other benefit plan, you will need to estimate the cash that will be contributed to the plan each period. If you have someone administer the plan, don't forget to include their fees in your projection.- Rent
Its not uncommon for lease agreements to have indexed increases or step-rates. Be sure and change your rent estimate accordingly.- Utilities
Self explanatory- Telephone
Self explanatory- Advertising and Promotions
Most business incur advertising costs in lump-sums, not evenly throughout the year (although they will often be spread out evenly on the P&L statement).- Office Supplies and Expenses
Self explanatory- Insurance
Do you pay premiums on an annual or quarterly basis? If so, be sure and get them in the right period. And watch out for worker's compensation insurance -- the "retro" nature of many of these policies hits the small business with a large bill at some time during the year. Check with your insurance company, and get them to help you anticipate this cash requirement.- Legal and Accounting
Year end tax returns or audits? A new contract, lease or business venture in the works? Plan the cash outlay in the month you expect it will occur.
Subtotal - Cash from by Operations
The sum of all the cash provided from and used by operating activities.
Investing Cash Flow
Include all investing cash flow under this section.
+/- Purchase/Sale of Equipment
This includes the total cash required for purchase or the total cash proceeds from the sale. Don't get this line confused with the gain or loss on sale.+/- Investments in Securities/Time Deposits
You may be in the favorable position of having investments in CDs or marketable securities. These are non-operating cash activities and are included under the Investing section.+/- Other noncurrent assets
Cash required to purchase a new business, intangible assets such as patents, or goodwill.
Subtotal: Investing Cash Flow
The sum of all the cash provided from and used by investing activities.
Financing Cash Flow
Include all financing cash flow under this section.
+/- Proceeds from Loans/Payments on Loans
Payments include both principal and interest, as well as any escrow deposits that you might have to make -- the total cash required for each payment. Proceeds of the loan would include the net cash that is funded to the business. This line is a good place for your "what-if" estimates to balance your cash flow projection.+/- Sale of Capital Stock/repurchase of stock
Net proceeds from any sale of equity interests or redemption of stock from shareholders.+/- Dividends Paid
Cash dividends paid to shareholders. If you organization form is a partnership, substitute Partners' Draws/Distributions.
Subtotal: Financing Cash Flow
The sum of all the cash provided from and used by financing activities.
Total Cash Flow During Period
The sum of all the cash activities during the period.
Cash Balance, End of Period
The beginning cash balance plus or minus the Total Cash Flow. The ending balance after the first
month then becomes the beginning balance for the next month, and so on.
There are other formats that can be used to prepare your Annual Cash Flow Projection. Some accounting or spreadsheet software packages include budget templates. The U.S. Small Business Administration has a preprinted worksheet (SBA FORM 1100 (1-83) REF: SOP 60) as one example.
