The cash flow forecast (also known as the cash budget) projects the amounts of money received into and paid out of the bank account each month. A typical cash budget sets out:
- the expected bank account receipts and payments;
- on a month-by-month basis;
- for a twelve month period.
The cash flow shows projections of all money received and money spent over the year (including VAT, corporation tax, etc.). For example: sales income, running expenses, tax payments and purchases of capital items. The “bottom line” of each monthly column shows the forecast bank balance at the end of that month.
Investors expect to see the cash flow forecast for the next three years in the business plan.
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