What Is Cash Projection and How You Can Use It to Make Data-Driven Decisions

Looking to make data-driven decisions for your business? Cash projection can give you the insights you need! Learn what is cash projection and how it can help.

Like most business owners, you’re always looking for ways to make data-driven decisions. After all, making decisions based on data is one of the best ways to ensure that your business is successful. But what if you don’t have any data? Or what if you don’t know where to start when it comes to collecting and analyzing data? This is where cash projection can help. Learn what is cash projection and how it can help your business.

What is Cash Projection?

What is cash projection? A cash projection is a statement that estimates an organization’s future cash receipts and disbursements. Cash flow forecasting aims to give management a roadmap for how the organization can generate and use cash to meet its financial obligations.

A cash projection is typically prepared on a monthly or quarterly basis.

How to Calculate Cash Flow Projections

Cash flow projections can be a scary thing to tackle, but it doesn’t have to be. Let’s take a step-by-step approach to calculate yours.

1. Assemble your documents

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This data includes your company’s income, expenses, and profits.

2. Find the opening balance of your account

Your bank account balance is how much money you have in your bank at the start of a period. (So, if you’ve just opened your business, this is 0.).

Your bank statement is a summary of your transactions for a given period of time.

The closing balance of last month should match the current opening account balance. This helps you to keep track of your money.

3. Account receivables (Cash in) for the next period

This is your estimated income, including money you expect to receive from customers, payments on credit and loans, and grants and investments.

4. Payables (cash out) for the next period

This is an estimated amount you owe for all your upcoming costs. This covers materials and supplies, rent, taxes and licenses, utility bills, insurance premiums, employee salaries, and any one-time or seasonable expenditures.

“The seasonality of a business can have a serious impact on its cash flows,” said Andrew Bailey, the CEO of a transportation company.

A good cash flow forecasting system will predict when your company will have more or less money coming in and going out.

5. Calculate the cash flow

Let’s use this cash flow formula to calculate our estimated cash flow: Cash Flow = Estimated Cash In – Estimated Cash Out.

6. Add your cash flow to the opening balance

Take your starting balance and add your incoming cash.

What Cash Projections Look Like on Paper

Cash flow forecasts are useful for planning your business’s finances. They typically show 12 months of projected income and expenses, with a separate section for incoming and outgoing payments.

Here are the different categories for your projected cash flows:

  • Opening balance or operating cash.
  • Money received 
  • Money spent 
  • Totals for cash received and cash spent, respectively.
  • Total cash flow 
  • Closing balance

This monthly section usually starts with your “cash flow” or “unspent” money from the previous period. So, if your December forecast predicted a $5,000 surplus, your January “cash flow” is $5,000.

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The operating cash flow section lists all the money a company expects to receive during the month. This includes any income that is expected from sales and any grant or loan payments that are due.

List all expenses on the left side of your page, such as salaries, rent, and utilities. Then, add them up on the right side.

Once you have your numbers, you can calculate the monthly cash flow by deducting the anticipated costs from the expected income.

Once you’ve done your calculations, add the result to the following month and keep going until you’ve made a forecast for 12 months ahead.

At the end of the month, update any monthly cash flow forecasts you have. Then, add an extra month to your forecast.

Be Smart in Cash flow Forecasting

The accuracy or inaccuracy of your projected cash flow is only as realistic as the input data. When inputting your cash flow projections, be as accurate as possible.

If you’re too generous with your sales estimates, it can skew your projection. Be as accurate as possible to get an accurate projection.

If you offer a 30-day payment plan, make sure to accurately project your cash flow to account for the fact that most customers will pay on the last day of the 30 days.

On the financial side, it’s important to consider both the annual and quarterly reports. It’s also important to plan for when your business reaches new tax brackets and tax rates.

If you pay your workers twice a month, keep in mind that three months a year have two paydays. This usually only happens twice per year. Watch your cash flow to ensure you can afford to pay both paychecks.

“For businesses that are more stable and established, monthly or quarterly reports might be more useful,” wrote Chris.

A business’s cash position should be monitored closely, especially during periods where significant changes are taking place.

At TheCEOsRightHand.com, we recommend that all small business owners, especially those just starting up, create a 13-week cash-flow projection. This can help you stay ahead of your financial obligations and adjust as needed.

Each week, update your sales forecasts based on the previous week. Then, extend your cash flow forecasting period by one week.

By keeping an eye on your cash flow, you can prevent any nasty surprises. By projecting your weekly expenses and earnings, you can plan for any potential shortfalls.

To account for unforeseen costs and ensure that your revenues are as accurate as possible, you can designate a percentage of your projected sales for “other” or “unanticipated” expenses.

If you are starting, it’s smart to put aside some extra funds as a cushion. This will help you avoid leaving anything out.

What now: Use Your Company’s Cash Flow Forecasts to Make Decisions

The Cash Flow Projection Chart is useful, but it’s only as valuable as the information you glean from it.

Instead of hiding it for the remainder of the month, consult your cash flow projections when making important financial decisions about your business.

If you’re anticipating a deficit in the coming months, look for ways to reduce spending, increase income, or save more.

If you find that payments are frequently coming in late, it may be beneficial to introduce a late fee for any overdue bills. This could help to encourage timely payments and improve your cash flow.

By looking at your projected cash flows, you can make informed decisions about when to invest in equipment, when to hire new employees, when to raise your prices, and when to run promotions.


What is cash projection? A cash projection is a statement that estimates an organization’s future cash receipts and disbursements. Cash projection is a valuable tool that can help you make data-driven decisions for your business.

By projecting your company’s future cash flow, you can get insights into where your business is headed and plan accordingly. So if you’re looking to make informed decisions about the future of your business, be sure to give cash projection a try!


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