Sheet 1: Tips

	
	
	

		


		

 
		
		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		
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, e.g. 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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The first rule in doing a cash forecast is to keep any assumptions simple, if you over complicate it you may not understand when you go back to it.  It is always recommended to record any assumptions that you have used in your forecast.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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Be as accurate as possible with your figures. It's worth putting careful thought into getting these figures right.  A forecast is usually the focus for banks and anyone reviewing your business financials. Make sure the assumptions behind your cash flow forecast are realistic.  
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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Try to include everything in your forecast. A missed postage expense here or a forgotten utility bill there may not seem like the end of the world, but over 12 months those incidental expenses can add up. If you’re sailing close to the wind financially, those unplanned expenses are what will tip you over the edge.  If in doubt, throw it into the forecast. It’s better to have accounted for an expense and not have to pay it than vice versa.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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You can easily check your forecast against your actual cash flow in the first few weeks of your forecast to see how accurate you are.  Don’t be scared to change your assumptions and constantly revise your forecast if you need to.  
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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Combine your sales history with solid market research to predict your sales projections. If you haven’t started your business yet, you will need detailed researching of the market to help you set realistic sales levels.  You should also consider seasonal / cycle periods as cash flow will rarely be consistent all year round.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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Using your estimate monthly sales, you will then be able to estimate your costs.  Best practice is to detail how you calculated these amounts.  
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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When you separate your costs into different categories, take some time to think about which are fixed and which are variable. Things like rent or other bills may remain the same the whole year, which makes forecasting that little bit easier. Other costs, such as utility bills, may vary seasonally – so factor these changes into your cashflow forecast.  Some costs will be tied directly to your profits e.g. stock, will only need to be purchased if sales are made.  Vehicle usage may also be tied to how much business you’re doing. If you suddenly take on more customers you may need to hire more staff to meet demand.  It’s important to remember that if you are predicting an upswing in sales, expenses will also rise.  Conversely, if you forecast a slowdown in your income, your cost base should decrease.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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Analyse your capacity.  If you estimate your cash flow for a month to be $30,000, consider how feasible this number really is.  There are only so many hours in the day and you will only be able to produce products or deal with a certain number of customers.  Remember that even if you invoice $30,000 of sales in a month, you can’t guarantee the full amount will be paid on time, e.g. you might estimate 60% of invoices are paid in the month of billing, 30% a month later, and 10% two months later.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		
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It is always good if you have access to industry benchmarks for profit.  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.   You should also consider your personal living expenses too.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

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

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		
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.
		
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


		


	
	

		


		
Please note: This is a guide only and should neither replace competent advice nor be taken, or relied upon, as Financial or Professional advice.  Seek professional advice before making any decisions that could affect your business.