1.7 What is the cash – flow of a project?

The cost allocation reflected in the budget of the action provides relevant information on the limit of expenditure for each budget item foreseen for the project implementation, but it does not give any information of the amounts needed at a certain time during project life time.

There is an essential difference between the budget and the cash flow of a project. The budget is containing virtually “allocated” amounts and the cash flow is containing “real amount needed to a certain moment for an actual expenditure”.

The cash flow has two main components: “cash in” and “cash out”. This is how the sources of financing, namely the money coming from the contracting authority and the money coming from the Contracting Authority, are directly linked with the budget items and the cash needed during project implementation.

Some of the advantages of updating regularly the records and keeping good track of budget expenditure are listed below:

  • Gives a clear picture of project resources still available in the project.
  • Serves as confirmation that the costs have occurred during the grant project implementation period.
  • Represents a reliable and effective source of data for the financial reports to be submitted to the Contracting Authority.

This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Regional Development Agency West and can in no way be taken to reflect the views of the European Union Office in Kosovo .

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