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Where has all the money gone?

By Kevin Bishop

Some might say that building a projected cash flow of their operating activities would send them to sleep, but the reality is that it can help you sleep at night. Cash is a critical part of the equation for most business decisions – and a lack of it is a key reason for failure.

The main questions regarding cash flow you need to ask are:

Can we afford the wages?

Can we afford another recruit?

Can we buy that machine?

If the impact of any of the above is more than you can handle, it might be a sign you need to strengthen your cash position.

Knowing your future cash position is crucial, as opposed to assuming what is it.

For me, it is like having a task on a list as opposed to having to remember it. 

Taking the time to understand your position is key whether the business is cash-poor or cash rich. It’s also essential if you are pressured into short-term debt/ wages or proposing a big spend. Remember banks and other lenders and investors love a cash flow projection to help them understand the viability of any loan, overdraft or lending request.

Why not have a go at creating your own cash flow projection?

Building your cash flow report

You will need a blank excel spreadsheet and the last 2 months’ bank statements as a start. This helps you build a back story to project from.

From the bank statements, your monies in and out should be evident. Keep to the same time period – we suggest you run the statements from midnight on the last day of the month.

Build a spreadsheet identifying past spending and income, utilising headers to identify where the spend was targeted. The headers can be what you want them to be, but a good starting point is the cost lines (especially overheads) on your profit and loss statements.

Use the base data and your knowledge to project what cash you will have coming in and going out over the next few months under the different headers.

With a few appropriate formulae, you can project out as far as you wish. The more knowledge of contracts and invoices that will affect your expenses and income in the short term and other payments, the closer you will be to understanding accurately what your cash flow position will be at any month-end point in time.

The spreadsheet can be as intricate as you want it to be, but simply taking the time to understand your income and expenditure over the next months will help you to sleep and monitor your cash health.

There are many options for creating cash flow projections. You can use professional business consultants, like those at UK Business Advisors, invest in one of the ranges of software models available or even do it yourself.


The clients I work with certainly understand their businesses better by using various forms of cash flow projection. They are used to support day-to-day challenges and long-term strategic decisions.

Cash flow projections should be used to support any strategy or growth plan in your business. Otherwise, how will you know whether it achieves the outcomes you desire?

If you need support in understanding your business cash flow position, get in touch with a UKBA advisor today.

Kevin Bishop | UK Business Advisors (

 [SC1]Don’t really understand what this means

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