Monthly Cashflow Projection : AR / AP build-up

01 Apr, by

Hi Friends,

I have just uploaded a Monthly Cashflow Projection template based on detailed monthly projections of AR collections and AP payments.

This template will be useful for yearly budget exercise as well.

In the illustration, you will notice that I have used %ages (based on past experience) to estimate monthly collections and payments.

The bigger issue in projecting cashflows (collections) is in first determining monthly sales. Most of the time, we get sales projections wrong (as can be seen from monthly sales variance analysis). Sales projections must be a bottom up approach/effort ie sales staff approach major customers (80/20 rule) to obtain the following year’s expected orders.

I shall be organising a sales projection template applying a statistical approach ie Linear Regression Model (LRM). This template will produce projected monthly sales figures (statistically) as a starting point for a Sales Budget exercise.

Do watch out for this LRM template on the “Templates” page.

Cheers!

Michael