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. |