Profit and cashflow projections
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profit

These can be prepared on an ad hoc basis or on a regularly (say monthly) basis, depending on the purpose. They will be prepared on a spreadsheet and wherever possible linked into your own financial records.

They would normally comprise month by month projections for the next 12 months and an outline of years 2 and 3, for the following:

  • profit and loss account
  • balance sheet
  • cashflow statement
  • schedule of overheads
  • summary of key factors, including sensitivity analysis.

Reasons for preparing one off financial projections might include:

  • part of the annual budget process
  • to support a refinancing or hire purchase arrangement
  • to assess the implications of a major business decision
  • request from the bank.

Regular updating is recommended where it is of vital importance to predict future funding requirements. This can be based on various scenarios, such as differing levels of sales, margins, costs or payment cycles.

Where a routine monthly accounting service is provided, a revised roll forward financial projection would normally be provided at the same time.

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