Business Plan Cash Flow

Business Plan Cash Flow-11
Since cash flows are all about timing and the flow of cash, you will need to have an opening bank balance (i.e.actual cash on hand), then add in all the cash inflows and deduct the cash outflows for each period, usually by month.

Since cash flows are all about timing and the flow of cash, you will need to have an opening bank balance (i.e.actual cash on hand), then add in all the cash inflows and deduct the cash outflows for each period, usually by month.

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The five steps to preparing a cash flow forecast are: For existing businesses, look at last year's sales figures.

Then decide what adjustments you will need to make based on past trends, i.e.

sales increasing or decreasing, or staying the same.

If you're a new business, when you prepare your cash flow forecasts, start by estimating all the cash outflows.

The number at the end of each month is referred to as the closing cash balance and this number becomes the opening cash balance for the next month. Once you've done your cash flow forecast, make sure you go back and check what you estimated against the actual cash flows for the period.

Do this to highlight any differences between estimated and actual, it will help you see why your cash flow didn't meet your expectations.Examples are: When you calculate your cash outflows, work out what it costs to make goods available.By doing this, if you do need to adjust your sales numbers later (eg you actually sold 10 units in March when you thought you would sell five), it will be easier to adjust actual cost of goods sold.The forecast will tell you if your business will have enough cash to run the business or pay to expand it.It will also show you when more cash is going out of the business, than in.There are two ways to improve how you manage your cash flow.The first is working capital management (managing stock, managing suppliers and debt recovery).For each month list the items and total the figures under the headings Cash incoming and Cash outgoing.Use the outline below as your starting point for your cash flow statement for each month: Whether you've already started or intending to start, you'll need to fill in actual or estimated figures against each item.See Finance for more information on managing and seeking finance.On your cash flow statement, list all your incoming and outgoing cash items with the dollar amount for the next 12 months.

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