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How to project cash flow in your operation

by Joel Slatis
cash flow projection

Managing cash flow is a critical aspect of any business operation and can help you make more informed financial decisions for your business. If you’re not sure how to project cash flow, we’ve compiled a few easy steps to get you on the right track.

Steps to Project Cash Flow

  1. Estimate Incoming Revenue: To get started, you should pinpoint all sources of revenue for your organization–sales, services, interest, rental, and beyond–to estimate how much revenue you can expect to generate.
  2. Estimate Outflow of Cash: Next, you need to note all of your regular business expenses such as utilities, rent, employee salaries and benefits, insurance, marketing, and any other costs. 
  3. Calculate Cash Flow: After you’ve figured out approximately how much cash is coming in and going out, you can determine your projected cash flow for a period of time (ie: a month, quarter, or year). To do this, you need to take your projected revenue and subtract the projected expenses (outflow of cash) for the defined period of time. This number is your projected cash flow. You can also find cash flow projection templates online to help you organize your information and see projections over different periods of time.

Once you have calculated the projected cash flow of your operation, you can use this data to identify patterns and anticipate future needs. Keep in mind that your business’s cash flow will fluctuate with any changes in revenue, expenses, etc., so it’s important to revisit your projection regularly to ensure you’re working with the most accurate information available.

In conclusion, understanding how to project cash flow is a critical part of managing your operation and can help you make informed decisions and anticipate your business’s needs. 

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