Create a Cash Flow

Projection

Rob Stephens, CPA

Founder

Photo by Cristiano Neto from Pexels

The importance of cash flow

“Never take your eyes off the cash flow because it’s the
lifeblood of business.” -Richard Branson

“If I had to run a company on three measures, those

measures would be customer satisfaction, employee
satisfaction, and cash flow.”-Jack Welch
The importance of cash flow

“We were always focused on our profit and loss statement.

But cash flow was not a regularly discussed topic. It was as if
we were driving along, watching only the speedometer, when
in fact we were running out of gas.” – Michael Dell

“One of the earliest lessons I learned in business was that

balance sheets and income statements are fiction. Cash flow
is reality.” -Chris Chocola
Cash flow stress
• 69% of small business owners have been kept
up at night by concerns about cash flow.
• More than half of U.S. businesses have lost
$10,000 or more by foregoing a project or sales
specifically due to issues created by insufficient
cash flow.
• 61% of small businesses regularly struggle with
cash flow.
Cash flow stress

US Bank:
82% of small businesses
fail because of poor cash
82% flow management skills or
poor understanding of
cash flow.
A Story: Wise Acre Frozen Treats
Learn
• How historical cash flow statements help you
understand your cash flow
• Benefits of cash flow projections
• How to create a cash flow projection
Receive
• Cash flow projection templates
• Microsoft Excel/Google Sheets
• Fillable PDF
• Guide on methods for cash
A little about Rob
• Founder of CFO Perspective – Financial
consulting and education for small business
owners.
• Website: cfoperspective.com
• CFO of two banks and a community health clinic
system
• Loan committees, managed advisers
• CPA, Masters in Financial Planning
• Teach entrepreneurial finance at a university
Understand your cash
flows with historical cash
flow statements
Cash Flow Statement format
Three categories of cash flows
Benefits of cash flow
forecasts and projections
Benefits
• Early identification of potential low (or negative)
cash balances

• Your bank, investors, or other stakeholders

need it

• Operations coordination
More benefits
• Identify cash “leaks”
• Lags in the cash conversion cycle.

• Opportunities to prioritize payments.

• Identify the need to get money from lenders or

owners

• Avoid tax penalties

And even more benefits
• Prepare for big cash outflows

• Match cash outflows to the seasonality of

inflows

• Plan out distributions to owners

• Capture opportunities
Forecast and projections
• Forecast – Baseline
• For example, budget
• Projections
• Sensitivity testing
• Stress testing
How to create a cash flow
projection
Creating a projection
Screen Recording
• Screen recording of cash flow projection
Congratulations, Thanks,
and Other Resources
Recap
• How historical cash flow statements help you
understand your cash flow
• Benefits of cash flow projections
• How to create a cash flow projection
Other Resources
• cfoperspective.com website
• Customized cash flow projection template and
guidance
• rob@cfoperspective.com
• Managing Cash Flow:
https://courses.cfoperspective.com/courses/man
aging-cash-flow
Congratulations and thank you!

Rob Stephens, CPA

Founder, CFO Perspective
rob@cfoperspective.com
cfoperspective.com
509.202.4652
courses.cfoperspective.com
Photo Credits

Photo by Jamie Street on Unsplash Photo by Matt Duncan on Unsplash

Photo by Cristiano Neto from Pexels