The cash flow is calculated by adding all cash (money) inflows and deducting all cash (money) outflows that occurred within a specific time period (month). By doing so it shows the cash balance, which is the sum of total cash reserves minus/plus cash flow. The cash-balance thus summarises the total money available to your institution to pay the bills and salaries in the next period (month).

The cash flow forecast estimates the cash inflows and cash outflows 6 months - 1 year in advance. It indicates if you will need to arrange for additional cash availability (e.g. through borrowing) in order to pay for the invoices and expenses of your institution per month or if you will have enough.

Basically you will need to answer the following questions:

• How much cash/money will our institution need in year x (monthly)? Which expenses do you have to pay when?
• How much revenue will you need to generate in year x (monthly) in order to pay your bills and have enough cash to sustain your operations?
• What are the basic assumptions for your forecasts? E.g., quarterly estimation of revenue and expenses, payment terms of your customers, payment terms with your suppliers, duration of time from donor's acceptance of your funding proposal till money is transferred, etc.