Financial Services LLC

Interim, Part-time, and Outsourced CFO Services


"In the beginning of our company, we didn't have a lot of cash around. It was important to keep track of nickels and dimes. John got us a business loan and alerted us to the importance of a strong balance sheet. We've never looked back."
-Carl McNeill, General Manager of Free Agents Marketing



Put together a 12 month cash flow forecast with this easy excel template

When constructing your forecast, keep the following in mind:

1. Don't get too worried about the specific details - get something on paper first, and then massage the numbers

2. Be sure to estimate the time it takes to convert sales into cash.

3. Don't worry about non-cash items like depreciation. Focus on cash in and cash out.

4. Pay particular attention to months where cash falls below a minimal, critical level. This is when a line of credit may be needed with a bank or family member.



Preparing a Cash Flow Forecast

The one phrase most important to any business owner is: “Cash is King”.

Without positive cash flow at the end of the day, someone is on the short end of the stick. Without positive cash flow, payroll is in jeopardy of being met and investors are at risk of losing their investment. Hence, without positive cash flow, the business is eventually worthless.

Because of the recession, selling prices have been depressed in virtually every commodity and service. The days of expecting inflation in revenues are over, at least for the present. Therefore a thorough and realistic understanding of monthly cash inflows and outflows is required for a successful business.

If your business is seasonal, you may find certain times of the year to be cash strapped, while other times having an abundance of cash. The challenge is to survive the bad times in anticipation of the good times. In these situations, a line of credit or loan from a bank may be needed to get you through the rough times.

A cash flow forecast starts off with a sales estimate, by month, for at least three years. Next, product costs and expenses are deducted from sales resulting in what is common referred to as a Profit and Loss statement, or P&L.

A P&L is then adjust positively for all noncash items like depreciation, and reduced for all cash payments like capital expenditures and principle loan payments. The result is cash flow, the amount added or subtracted from your checking account.