A Cash Flow Projection Template You Can Build in One Sitting

The layout: rows and columns

Use months across the top and five blocks down the side: opening cash, cash in, cash out, net cash flow and closing cash.

Open a spreadsheet and label columns for the next 12 months. For a short-term view, use 13 weeks instead. Then add these rows:

1. Opening cash. The bank balance at the start of the period.
2. Cash in. Customer payments, deposits, interest, any loan or owner money you expect.
3. Cash out. Payroll, rent, supplier bills, loan payments, taxes, insurance, software, owner pay.
4. Net cash flow. Total in minus total out.
5. Closing cash. Opening plus net. It becomes the next period's opening.

Add one extra line at the bottom: minimum cash you want on hand. Any month where closing cash dips below it is a flag.

Filling the cash-in rows realistically

Project cash when it arrives, not when you invoice. Base it on how your customers actually pay.

The common mistake is putting sales in the month they happen. If your customers pay in about 30 days, April sales show up in May. Look at your last six months of invoices and note the average days to get paid. Then shift every sale forward by that amount.

If you have seasonal sales, use last year's pattern as a base and adjust for growth you can defend. Do not assume a single big customer will pay early. Build a conservative line and a hopeful line, and plan around the conservative one.

For how receivables behave, see what is accounts receivable.

Filling the cash-out rows without missing anything

Pull twelve months of bank and card statements and list every recurring and irregular payment by the month it is due.

Go through statements line by line. Recurring items are easy: rent, payroll, loan payments. The ones that hurt are irregular payments you forgot:

• Quarterly estimated taxes and sales tax remittances
• Annual insurance premiums and license renewals
• Equipment repairs and replacement cycles
• Inventory purchases ahead of your busy season
• Owner draws and bonuses

Put each in the exact month it will leave the account. A cash flow projection that omits a $9,000 insurance bill in September is wrong in September, which is when it matters.

A worked example

This illustrative example shows a small business starting with $25,000, and how a quiet month pushes closing cash close to zero.

The numbers below are round and illustrative only.

Month 2 is the story. Sales dip to $45,000 while a quarterly tax payment lifts costs to $64,000. The business ends with $3,000, far below a payroll cycle. With this seen in advance, the owner has two months to collect faster, delay a purchase or arrange a bridge.

Testing the projection with a downside case

Copy your sheet and cut cash in by 15 to 20 percent. If closing cash goes negative, you need a plan for that scenario.

Forecasts are guesses, so test them. In the copy, reduce expected receipts by 20 percent, and push one large customer payment out by 30 days. Look for the first month that closing cash falls below zero.

This is not pessimism. It tells you how much cushion you need. If the downside case runs out of cash in month 4, you have until month 4 to arrange a line of credit, build a reserve or reduce commitments. See how to stress test payments if revenue drops for a related exercise.

Keeping it accurate week after week

Compare projected and actual figures every month, note the biggest misses and adjust your assumptions.

Add an 'actual' row under each projected row. At month end, fill in what happened. The variance is where you learn. If receipts are consistently 10 percent lower than projected, your customers pay slower than you assumed. If costs run over, you have missed a category.

Roll the projection forward each month so it always covers the next 12. Our guide to cash flow forecasting covers methods for different business types, and why create a cash flow projection explains what lenders and funders do with one.

Using the projection to decide on funding

The projection shows how large a gap is, when it starts and when it closes. That sets the amount, the timing and the product to look at.

If the sheet shows a $20,000 gap lasting two months that repeats each year, a revolving business line of credit may fit. If it shows a one-time $60,000 need for stock before a busy season, working capital might. Borrow the amount the projection supports, not a round number that feels safe.

ROI Funder funds $5,000 to $5,000,000 and works from the payback math. A complete file is the application plus three months of business bank statements. Eligibility starts at 500+ FICO, 6+ months in business and $20,000+ in monthly revenue.