FA-301f · Module 2

Annual Cash Projection

3 min read

The annual cash projection connects the revenue forecast to the operating model to the bank balance — month by month for 12 months. It answers the strategic cash questions: when do we cross cash flow breakeven? How much runway do we have? When do we need to raise? What is the minimum cash balance we will reach, and in which month? These are board-level questions, and the annual cash projection is the only model that answers them.

Annual Cash Projection — FY 2026:
──────────────────────────────────────────────────────
         Q1       Q2       Q3       Q4      FY
──────────────────────────────────────────────────────
Cash In:
 Revenue  $3.6M    $4.1M    $4.8M    $5.5M   $18.0M
 Collect. $3.2M    $3.8M    $4.4M    $5.1M   $16.5M
 Prepays  $0.8M    $0.4M    $0.6M    $1.2M    $3.0M
──────────────────────────────────────────────────────
Total In  $4.0M    $4.2M    $5.0M    $6.3M   $19.5M

Cash Out:
 Payroll ($2.8M)  ($3.1M)  ($3.3M)  ($3.5M) ($12.7M)
 Vendors ($0.8M)  ($0.9M)  ($0.9M)  ($1.0M)  ($3.6M)
 Other   ($0.6M)  ($0.5M)  ($0.5M)  ($0.6M)  ($2.2M)
──────────────────────────────────────────────────────
Total Out($4.2M)  ($4.5M)  ($4.7M)  ($5.1M) ($18.5M)

Net Cash ($0.2M)  ($0.3M)   $0.3M    $1.2M    $1.0M
Balance   $7.2M    $6.9M    $7.2M    $8.4M    $8.4M
──────────────────────────────────────────────────────
Min balance: $6.9M (Q2) | Breakeven: Q3

Do This

  • Project cash monthly for 12 months with collection timing, not just revenue timing
  • Identify the minimum cash month and ensure it exceeds 6 months of operating expenses
  • Build three scenarios (base, downside, upside) for the annual cash projection

Avoid This

  • Project cash annually without monthly detail — the annual total hides the mid-year trough
  • Use revenue timing as a proxy for cash timing — they differ by 30-60 days
  • Present only the base case — the board needs to see the downside cash position