You have established your budget in terms of what you expect in total revenue and expenses for a designated period, such as one year. The cash flow projection goes a step further by identifying when your expect the money to come in and go out, by month or by quarter, so you know whether you will be able to pay your bills on time and not overdraw your bank account.
Including a cash flow projection in your business plan gives you a realistic view of what revenue you need to pay your expected expenses for people, fixed costs and recurring costs. The projection shows the cash you have begun with and it breaks down expected revenue and expenses in enough detail that you can easily update it as you go along.
The cash flow projection will remain a valuable and important management tool for the organization. If you are seeking foundation grants, donors may ask to see your past cash flow projections.
Free templates and expert advice are widely available for creating these financial reports.
RESOURCE: Sample Cash Flow Statement from legal guide publisher Nolo.com