Using a Cash Flow Projection Template for your Budget or Business Plan

A cash flow projection, also known as a cash flow forecast, is a set of financial statements that project the cash flow, or rather, the movement of cash in and out of your business, an organization, or an individual, over a given period.

There are two methods for calculating your estimated net cash flow:

  • Direct Cash Flow Method
  • Indirect Cash Flow Method

The direct method presents operating receipts and payments (and all other items that have an effect on cash flow) as they occur. This is the easiest method, however, oftentimes net working capital effects are neglected. The indirect method is more complete, as it bases on the creation of creating the three financial statements: Income Statement, Balance Sheet, and Cash Flow statement which allows checking if those statements are inherently concise. Both methods can be used to forecast cash flows, while the indirect method oftentimes shows a higher level of quality. For our purposes, we focus on the indirect cash flow method by forecasting the three statements Income Statement, Balance Sheet, and Cash Flow Statement for our business.

A good cash flow projection template is essential, as it influences business planning, budgeting, and is vital during the decision-making process. A 12 months cash flow projection template mostly serve budgeting purposes, while a minimum 3-year cash flow projection template is needed to come up with a longer-term financial plan.


12 Month Cash Flow Projection Templates as part of your Budget

A 12-month cash flow projection template basically is a budget which focuses on understanding cash flows for the next year. It is something essential to have in business, as you want to avoid any negative surprises end of the year.  The first step in developing a 12-month cash flow projection is to assess expected revenues and expenses for each month for an entire financial year.

If you’ve been in business, you can use previous sale history to substantiate your sales and expense assumptions—and if you’re just starting out, you can use economic surveys and logic to determine what you can likely expect within a 12-month time period.

The advantage of using a 12-month cash flow projection template is that you can correctly reflect seasonal patterns. This might lead that in some months you are losing money while income is coming in, only in some months. This budget will help you to better understand your cash position during the year and will prepare you to plan for sufficient liquidity for your business. Do not forget to factor in future plans and market trends/conditions. For instance, if you’re planning to launch a new product or add a new item to your inventory of sales products, you should expect a certain “sales increment” which should ultimately be factored into your sales forecast. Similarly, if a competitor just entered your domain, you may consider showing an impact on sales volumes or prices, if needed.

What does a cash flow projection template look like?  – Some examples are provided below:

The purpose of this model is to provide a simple way to show the below summary by month for many companies in one file -Income statement -Balance sheet -Cash flow statement -Financial ratio -Charts and…

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This monthly budget-to-actual dashboard allows for at-a-glance performance analysis. In addition to analyzing YTD performance, it also provides a revised forecast for the year based on actual performance to date and budgeted performance for the…

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A simple way to measure your projections by month against what you actually did. Includes visual variance analysis. Goes out 3 years.

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Consolidated Financial Statements Actual vs. Budget Model Template

Monthly/Quarterly Salesmen Bonus Template

Budget to Actual Comparison Dashboard


3 Year Cash Flow Projection Template – Your Business Plan

Your business plan will only have meaning if it is backed up by a solid financial plan. The financial plan will outline where you will generate revenues, which costs you expect and why and how much profits the business should generate.  A detailed operating model translates the assumptions in the projected income statement, balance sheet, and cash flow statement, over a minimum three year forecasting period. The 3 Year Cash Flow Projection Template is the minimum required financial plan to have, in order to build a business plan. Business plans can also go up to 5 years. However, the reality is that normally after 3 years, it will be very difficult to justify what will happen. Longer projections are then even more difficult to come up, as is with as simply the range of scenario outcomes will increase so that after three to five years, the best-educated guess normally will focus on normalized profit the business can generate.

A financial plan should clearly explain the expected cash flow projections of a business going forward. Sometimes, profits are subject to manipulations due to some freedom on how to interpret accounting rules. Cash is a more precise figure and most financial analyst and business valuation experts will focus on the business’ true cash flow generation potential.

A 3-year cash flow projection template can prove to be especially useful when considering the theoretical “what-if” scenarios to simulate any change in assumptions on the forecasted cash flow over time. To compare scenarios, one can simply compare the resulting cash balance at the end of the forecast period and compare to other scenario results.

Creating a financial model from scratch can be tedious and time-consuming. For this reason, eFinancialModels offers a selection of cash flow projection templates for a variety of industry and use cases.

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This financial model can be used to evaluate the financial feasibility of a real estate development project and present it in investor grade quality to your partners. There is everything in there which is needed…

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