0 The Business Plan For You

The Money Flow Projection shows how money is expected to flow in & out of your business. For you, it is an important device for money flow management, letting you know when your expenditures are high or when you may require to arrange short term investments to deal with a money flow surplus. As part of your business plan, a Money Flow Projection will give you a much better idea of how much capital investment your business idea needs.

For a bank loans officer, the Money Flow Projection offers facts that your business is a nice credit risk & that there will be money on hand to make your business a nice candidate for a line of credit or short term loan.

Do not confuse a Money Flow Projection with a Money Flow Statement. The Money Flow Statement shows how money has flowed in & out of your business. In other words, it describes the money flow that has occurred historically. The Money Flow Projection shows the money that is anticipated to be generated or expended over a selected time period in the future.

While both types of Money Flow reports are important business decision-making tools for businesses, we are only concerned with the Money Flow Projection in the business plan. You will require to show Money Flow Projections for each month over a year period as part of the Financial Plan portion of your business plan.

The second part is your Money Disbursements. Take the various expense categories from your ledger & list the money expenditures you actually expect to pay that month for each month.

There's parts to the Money Flow Projection. The first part details your Money Revenues. Enter your estimated sales figures for each month. Keep in mind that these are Money Revenues; you will only enter the sales that are collectible in money in the coursework of the specific month you are dealing with.

The third part of the Money Flow Projection is the Reconciliation of Money Revenues to Money Disbursements. As the word "reconciliation" suggests, this section starts with an opening balance which is the carryover from the earlier month's operations. The current month's Revenues are added to this balance; the current month's Disbursements are subtracted, & the adjusted money flow balance is carried over to the next month.