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Projecting Cash Inflows

Projecting cash receipts for your cash flow budget involves recognizing the cash inflows from a sales forecast. If your business only accepts cash sales, then your projected cash receipts will equal the amount of sales predicted in the sales forecast.

Projecting cash receipts is a little more involved if your business extends credit to its customers and deals with accounts receivable. If this is the case, you must take into account the collection of accounts receivable and the timing effect that collection has on the projection of your cash receipts. Applying your accounts receivable collection pattern from the past to your sales forecast is the best way to predict your cash receipts from the collection of accounts receivable. To see how this is done, take a look at our case study.