Lesson 6

• Projected Collection


  The anticipated amount of money a company expects to receive from its customers over a specific period
• Ways to calculate Projected Collections


  1. Analyze historical sales data

  2. Customer payment trends

  3. Relevant factors that may impact the timing and amount of incoming cash
• Importance of Projecting Collection 


  • Companies can better manage their cash flow, plan future expenses, and make informed financial decisions.

  • Helps business anticipate their liquidity needs and identity potential cash shortages of surpluses.

  • Take proactive measures to maintain financial stability.
• Formula for Projected Collections


  PC = = TPSR * PSE
• PC = projected collections

  TPSR = total projected sales revenue

  PSE = percentage of sales expected

  to be collected within the period