How to Compute Required New Funds in Business Finance
The best way to compute required new funds for business finance is to create a cash flow projection. This document will compare the amount of money you anticipate receiving during a given period with the amount of money you anticipate spending during that time. The amount by which your projected spending exceeds your projected income is the amount of financing that your business requires.
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Instructions
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Divide your spreadsheet into columns representing each month of the period it will cover. If it will cover multiple years, use a page for each year and divide each year into twelve columns.
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Use the left hand margin of your spreadsheet to label the different lines. Label the top line, "Starting Capital." Use the following lines to list your different categories of business capital such as wholesale and retail sales, as well as capital infusions and existing credit lines.
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3
Label the line under the revenue section, "Available Cash." Skip a line and label the lower section, "Expenses." Use this section to list the categories of expenditures that your business typically makes, such as materials, labor, rent and taxes.
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Enter the amount of cash you currently have on hand in the top box of the first column of your spreadsheet. Fill in the boxes of your spreadsheet with the amounts you anticipate earning and spending each month.
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Add the starting cash on hand to the total amount of revenue you anticipate earning during the first month. Enter that figure on the line marked, "Available Capital." Then add up the first month's expenses, and subtract your total expenses from your available capital. Enter this amount at the top of the second column as the starting capital for the second month.
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Repeat this process for each month outlined on the spreadsheet. The amount that you come up short at the end of the period you are calculating is the amount of new funds you will need to finance your business.
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