Projecting Cash Outflows

Projecting your cash outflows for your cash flow budget involves projecting your expenses and other cash outflows over a certain period of time. Projecting your expenses for the next month or six months may seem like a difficult task. You may even feel like you're guessing when projecting some of your business's expenses. After all, there are a number of different variables that ultimately determine the amount of each expense.

An accounts payable aging schedule may help you determine your cash outflows for certain expenses in the near future — 30 to 60 days. An accounts payable aging schedule lists all of the amounts you owe to your suppliers. This will give you a good estimate of the cash outflows necessary to pay your accounts payable. Another tip for projecting your cash outflows is to classify each of your business' expenses. The cash outflows for every business can be classified into one of four possible categories of cash outflows:

• costs of goods sold
• operating expenses
• major purchases
• debt payments

See also our case study on projecting your outflows for cost of goods sold.