Project Cash Flow to Meet Objectives

Objectives are the goal posts for moving your organization forward – adding staff, expanding locations or increasing capacity. Cash makes all of that happen. Reliably projecting when cash will come in and when it goes out may seem like an unnecessary exercise while you are busy running your organization. Not true! Cash flow projections are an essential tool for meeting your objectives.

Can you afford that new position or storefront? When will that new equipment pay for itself with added income? Answering these and other important questions depends on reliable and realistic cash flow projections. That’s great to know, but how in the world do you project your cash flow?

Three tips for projecting cash flow to meet your organization’s objectives:

Payment Commitments

Start by projecting payments that you know are going to happen. Some expenses, like payroll and rent, happen at a specific time, no matter what. Scheduled income payments, like retainers, are also known in advance. Plot out when those payments will come in and go out. Add other payments that are seasonal or occasional in the month or week that you expect or estimate that they will occur.

Past Experience

Past years’ payment history is a gold mine for projecting cash flow. What unexpected items have happened in the past? How likely is that to happen again this year? Timing when payments come in and go out highlights periods when you might be in danger of running low on cash. Seeing in advance that cash your cash will be tight gives you opportunities to make adjustments.

Invest to Keep Up and Grow

After plugging in all the known income and expenses, estimating the variable amounts and adjusting the timing, sit back and examine the results. Is there cash available to invest in technology, improvements or growth? Can you afford that new piece of equipment that you need just to keep up with the competition? Cash flow projections will help you answer those and other important questions.

Meeting objectives requires planning. Organizations need to reliably project when cash will come in and go out to successfully meet objectives, and to make adjustments when projections indicate that cash is about to get tight. Answer important questions about sustaining and growing your organization with reliable and realistic cash flow projections, and meet your objectives.