Cash flow forecast vs projection

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Ajay Singh Bhati

Manager (Accounts)

108 Points Posted on 12 December 2013

Dear Members,

What is the difference between Cash Flow Forecast and Cash Flow Projection. I want to apply for an O/D from bank and bank requires Cash Flow Forecast for next 12 months and also Projection for the period for which I am applying for Finance.

Company has a seasonal business of blankets and I have only last 1 years accounting data on computer. On that basis how can I make these reports. I mean can I assume sales figure percentage on the basis of monthly sales done during last year?

An early respnose shall be a great help from your side. Thanks in advance.

B/Regards

Replies (2)

Subhash

None

114 Points Posted on 13 December 2013

Hello Sir,

Simple assumption difference. Both are future oriented.

Forecast is done basing on existing conditions.
Hence, it reflects the actual scenario.
What it actually is!

Projection is done basing on imaginary conditions (or say, the cash flow what if the company deviates from the existing conditions and follows a different path?).
Hence, it reflects the desired scenario/imaginary scenario.
What you want it to be like!

For simplifying your work, Microsoft is offering Cash Flow Forecast Templates (free).
Download it and make your work easy.

Hoping I was of some help.

Regards,
Subhash.