Small business owners often prepare a projected cash flow statement. These set a prediction of the company’s available funds over a specified period of time. The primary goal is to determine whether the business will have enough cash to pay the bills. These statements show, ahead of time, whether it will be necessary to find another source of funding.

When trying to get a business loan, it’s important for Maine-based small business owners to have a professionally prepared cash flow statement before they talk to a lender. This information may enable a small company owner to secure a line of credit to use during dips in the business cycle, or if an emergency expense comes up.

A statement of cash flow reports the money coming into and out of your business. Cash flow equals cash receipts minus cash payments over a given period of time. It can also be the net profit plus amounts charged off for depreciation, depletion, and amortization. A projected cash flow statement is a prediction of the same for the future.

With an established small business, projected cash flow predictions can be made based on history, as well as any budgeted changes, such as future price increases.

A projected cash flow statement for a start-up business involves a comprehensive list of budgeted expenses, including a conservative estimate of revenues. The budget must include any expenses that may have been overlooked in the start-up process, like professional fees, licensing, or security deposits.

Almost all small businesses experience ups and downs when it comes to cash flow. A critical piece of a company’s longevity is advance preparation for the downturns, as well as careful management of the upturns.

For more information about projected cash flow statements, contact Filler & Associates to schedule an appointment.