When should you prepare financial projections?
A projection is meaningful when it is tied to a specific decision.
- A hire is in preparation
You want to know whether your revenue can absorb a new salary, and from when.
- An investment to finance
Equipment or premises require a significant expense: you want to see its effect on your cash flow.
- A new stage to plan
A service to launch, a growing business: you want to see what changes depending on the scenario.
How we build your financial projections.
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Start from your data
We gather your recent revenue and expenses: they anchor the projection in the reality of your business.
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Write down the assumptions
Expected revenue, upcoming expenses, project timeline: each assumption is stated and discussed with you.
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Compare the scenarios
We show what changes when revenue arrives later, an expense increases or the project evolves.
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Build the cash flow budget
It projects your cash inflows and outflows and identifies the periods when the project could require more liquidity.
What the projection gives you, and its limits.
You get
- Revenue, expense and cash flow scenarios
- The selected assumptions, in writing
- The periods to watch for your liquidity
- Benchmarks to decide on or adjust your project
Good to know
- A projection describes a possible evolution: it does not guarantee results.
- If your project changes, the assumptions must be revisited.
- Missing information limits precision; it remains visible in the analysis.
Questions about financial projections
What is a financial projection?
A financial projection describes a possible evolution of revenue, expenses and financial needs based on data and assumptions. It is used to prepare a decision and to compare scenarios.
What is the difference between financial projections and financial forecasts?
The two terms are often used interchangeably. Strictly speaking, a financial forecast describes the evolution considered most likely, while a projection explores what would happen under selected assumptions, for example to compare several scenarios.
What is a cash flow forecast used for in a project?
It helps you understand when money could come in or go out and identify liquidity needs in the scenario under consideration. This reading complements that of revenue and expenses.
Do you need perfect data to prepare projections?
You need to be able to distinguish the available data from the assumptions. Missing information can limit the precision of the scenarios; it must remain visible in the analysis.
Go further with your numbers.
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