Building a Better Budget, Part 6: Projecting Cash Required for Expenses

November 2010
by Marion Gropen

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Building a Better Budget, Part 6: Projecting Cash Required for Expenses

by Marion Gropen

Publishing companies are more vulnerable to cash-flow crises than most other types of businesses. And most of the strategies you can employ to avoid them require time, which means you need to project your net cash position for each month for at least 12 months into the future.

Earlier articles in this series have discussed the process of building a budget and ways to project your cash inflows. You also need to project your outflows, and that’s what we will tackle now, starting with the largest chunk—cost of goods sold (COGS)—and covering other types of expenditures, ways to compute your net cash position, ways to spot trouble coming, and possible strategies for avoiding it.

Cash Outflow: COGS

In most businesses, you need to invest in making your product before you can sell anything. The book business is no exception to that rule, although the time between investment and return may be long, and the size and predictability of the profit may be low.

There are three different kinds of costs of goods sold (COGS) in book publishing, but we predict the cash spent on…IBPA Members – Click here to view the full article (login required).

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