How to: Complete Financial Projections

Completing Financial Projections in Preparation for Funding Applications

What financial documents are required in support of a grant application?

Most recent set of accounts filed with the CRO
Management accounts from previous year-end to the present
3-year monthly cash flow projections (template provided)
3-year profit and loss projections (template provided)
Evidence of resources in place to match fund the total grant sought

What additional documentation is required with a grant application?

Last payroll detail filed with revenue (employers only)
Tax Clearance access number (available via ros.ie)
CRO certificate (if incorporated) / or evidence of business start date
3 quotes for all items of expenditure >€5,000
1 quote for all items of expenditure <€5,000

What makes a good grant application?

A robust plan for business growth
Thoroughly developed financial projections
Extensive market research
Evidence of a pipeline of sales and defined route to market
Identification of skill/resources gaps and a plan to acquire them

What are cash flow projections?

Cash flow projections estimate how much money will move in and out of your business monthly.

These monthly estimates predict surges or shortages in cash flow, therefore allowing you to make better business decisions and to understand how these decisions may impact future cashflow. These decisions may be significant purchases, when you can recruit a new member of staff, your ability to fund new products/services or to plan for loan support.

How to create financial projections?

STEP 1 – OPENING BALANCE:

Cash at beginning of period = previous period’s income – previous period’s expenses

STEP 2 - CASH IN:

The money coming into your business is split into 2 categories – sales income and non-sales income.

Sales income shows when payments are received not invoiced, ie it considers credit terms offered to customers.

Non-sales income might include bank loans, grant support, investment, director loans, rental income, or any other sources of income to the business.

Sales predictions should be achievable to allow you to make spending decisions you can afford. You can project future cash by looking at trends from previous periods, forward orders, etc. You should account for any strategic changes (eg. New products, investment in production capabilities, increased marketing spend, etc.).

STEP 3 - CASH OUT:

After projecting sales, you need to consider the cost of producing the goods or supplying the services to meet those sales. You need to consider all costs that relate to your operations.

This includes direct costs of producing the goods or supplying the services, such as:

- Materials

- Employee wages

- Packaging

- Advertising

- Etc.

And indirect costs, such as:

- Loan repayments

- Rent

- Utilities

- Travel costs

- Phone bills

- Etc.

Points to note:

We recommend that you do include projected grant funding in your cashflow.
If you are registered for VAT, make sure to include your sales amount exclusive of VAT.
When preparing cash-in you should record when you expect to receive payment, not when you invoice.
When preparing cash-out you should include the cost of expenses during the month you pay them and recognise variance/seasonality across the year.
Ensure your cash flow accounts for the salaries associated with the employment projections in your grant application.
You should annotate your projections and explain any irregularities.

While these projections are a requirement of grant funding, maintaining and understanding your accounts, and developing considered cash flow projections on a regular basis will support you in making the best financial decisions for your business.

Support Available

We host regular financial planning workshops if you require more detailed guidance in preparing financial projections for your business. Click here to see when the next session is taking place >>

Kildare