Sheet 1: Cash flow tips

	
	
	
	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		

 
		
		
	

		

 
		
		
	

		


		


		
How to use the cash flow forecast template
		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		
It's vital to monitor your cash flow in business.  Using a cash flow forecast can help you plan ahead for the good times and bad. For example, if you know a period is coming up when business will be slow you can plan ahead to arrange finance. Or you can time an expansion with an upcoming period of strong cash flow.  
		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		
Tips for completing your cash flow forecast template:
		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		
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Try to be as accurate as possible with your figures. It's worth putting some time and careful thought into getting these figures right as this forecast is usually the focus for banks and anyone reviewing your business financials. At the bottom of the template, make detailed notes on the assumptions you've made in your forecast.
		


	
	

		


		
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Use solid market research as well as your sales history to inform your sales projections. If you haven’t started your business, thoroughly researching the market to assess realistic sales levels for the future will be crucial.  You should also consider peak seasonal periods as cash flow isn’t usually consistent all year round.
		


	
	

		


		
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Once you’ve estimated the sales for each month, you will be able to estimate your costs. Again, you will need to explain in detail how you calculated these amounts. Make sure your own salary is realistic - can you cover your personal living costs, or will you be draining too much out of the business too soon? 
		


	
	

		


		
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Check your capacity. If you estimate your cash flow for a month to be $50,000, consider how feasible this number really is.  There are only so many hours in the day and you will only be able to deal with a certain number of customers.  Also, remember that even if you invoice $50,000 of sales in a month, you can’t guarantee the full amount will be paid on time. For example, you might estimate 80% of invoices are paid in the month of billing, 10% a month later, and 10% two months later.
		


	
	

		


		
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Find benchmarks for profit in your industry. If yours are very different from the average, people assessing your business will want to know why.
		


	
	

		


		
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Make sure your own salary is realistic -  it's a balance between paying yourself too much and not paying enough to meet your expenses. Consider your personal living expenses too.
		


	
	

		


		
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Don't forget one-off items like accounting fees and your tax obligations – many businesses struggle to find the cash to pay taxes when they’re due. Your accountant can help you estimate what your tax obligations are likely to be.
		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		
HANDY TIP
		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		
It’s always a good idea to run your figures past an accountant before presenting your cash flow forecast to outside readers, such as potential lenders or investors.