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If you were to build a dynamic 3-statement financial projection that balanced, how would you build the model using a fixed cash balance? How would you build the model using a changing cash balance?

Vanessa Kruze Kruze Consulting

Vanessa Kruze

CEO and Founder of Kruze Consulting

Table of contents

You want the Cash Balance to be dynamic. Hard plugging something like that will get you in a lot of trouble as you start making changes.

The Cash Flow Statement will drive the Cash Balance on the Balance Sheet. First of all, the net income (or loss in the case of most startups) flows from the bottom of the Income Statement to the top of the Cash Flow Statement. Let the changes in Working Capital on the Balance Sheet flow into the Cash Flow Statement. Then use the Cash at the End of Period (last line of the Cash Flow Statement) to flow into Cash on Balance Sheet.

We have free financial models that you can download on our Financial Modeling page, and also have some helpful how to’s when it comes to projections on our startup financial projections Q&A page. Basically, when doing projections for startups, cash is king, so you’ll want to make sure you understand not only the timing of your expenses and revenues, but also the timing of your cash collections. Getting that cash burn rate projected correctly is very important. 

Kruze Consulting is a leading accounting firm working with seed and venture funded Delaware C-Corps. Funded startups choose Kruze Consulting’s team of CPAs, bookkeepers, CFOs, former IRS tax auditors, and venture experts. In addition to running the books, Kruze does tax, finance, and HR. Contact Kruze today!


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