This refers to the inflows and outflows of cash within a business. In Development Finance to project the Build Budget / Build Costs over the Build Term. This is important as when Borrowers require monies to fund the build, and when they expect to sell the properties at the end, directly affects their profit; the greater the distance between the two variables increases the cost of funding the project. Lenders generally assume equal draws of the Build Loan across the Build Term; e.g. if you have a Build Loan of £ 1m, and a 10 month Build Term, the Lender will assume that £ 100k is drawn every month for the Build Term. This is wholly unrealistic, and as a result means that the cost of the funding is skewed. By providing an accurate projected Cashflow at the outset, and keeping it up to date through the build, will only help you to actively monitor (and hopefully reduce) your funding costs.
