What are financial and cash flow projections and why are they important?
Financial and cash flow projections are a key component of your business plan for start-up and expanding businesses. Financial projections detail your monthly budget for two years into the future for revenue, expenses, profit, and cash flow. Projections are supported by detailed narrative assumptions which outline how each line item in the budget was estimated. When reviewing an application for financing, a lender reviews projections to determine if the business owners have a reasonable, well planned vision for how much the company will grow and how the business will generate adequate cash flow to make debt payments. Creating financial projections is challenging, and free technical assistance is available.
