Cash Flow

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Cash Flow

• (Who needs it!)

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• The Owner
• The Lender
• The Accountant

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What is it?
Cash Flow
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Cash Flow Projection

• Also referred to as the Cash Flow Plan or budget
• An estimate of the monthly cash inflow and
  outflow for a period of time (usually one
  year).
• A planning tool/monitoring tool

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When shouldI do it?
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• In the planning stage
• Before your accounting year begins use the cash
  flow as a monitoring tool for your financing needs

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How do I do it?
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• Research industry norms
• Adjust for changes unique to your situation
• Document data as to how you arrived at the numbers

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Cash Inflow Includes

• All income
• Sale of capital items
• Other capital investments

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Cash Outflow Includes

• All direct and indirect expenses
• Capital purchases
• Principal and interest payments
• Withdrawals

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What if it doesnt flow?
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Six Ways to Deal with Cash Deficits

• Increase cash receipts
• Reduce cash expenses
• Refinance debt
• Sell intermediate or long term (fixed) assets
• Utilize savings or other investments
• Borrow money

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Then

• Monitor
• Revise
• And monitor some more!