What projections usually include
Projections set out the revenue and expenses you expect over the coming months. BDC describes them as a way to prepare for weaker cash flow, work out when financing may be needed and choose a sensible time to start projects. Most sets include a projected income statement and a cash flow projection, and some add a projected balance sheet.
Each figure rests on assumptions, such as how many customers you expect, what you will charge, when customers pay and which costs are fixed. Writing those assumptions down is as important as the numbers, because they are what you test when results differ.
How projections differ from a budget
The two overlap, and the words are often mixed. A budget is generally a plan you manage against, month by month. Projections look further out and ask what could happen, so they often include more than one scenario. A projection may also feed a budget once you decide which assumptions to commit to.
The comparison of plan and actual is covered under budget variance. The short-term, week-by-week view of bank balances is covered under cash flow forecasting.
An illustrative example
Suppose a new landscaping business expects $10,000 of monthly revenue in summer and $2,000 in winter, with $4,000 of costs that continue all year. A projection that only averages the year looks comfortable. A monthly projection shows winter months where costs exceed revenue by $2,000 each, so savings or a credit arrangement may be needed. The figures are illustrative only.
The value lies in seeing the gap early enough to act. A realistic downside scenario, such as sales 20 per cent below expectation, is often more useful than a single optimistic line.
What to discuss with your accountant
If you are applying for financing, a lender may ask for projections alongside past statements. Ask your accountant which format suits the request, how far ahead to project, and which assumptions a lender is likely to question.
Bring last year’s financial statements, known contracts, seasonal patterns, planned purchases and any tax balances you expect to owe. Review the projection when something material changes, rather than only once a year, so that decisions about hiring, equipment or borrowing use current information.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.