How a Cash flow forecast works
A cash flow forecast spreadsheet layout is very similar to an ordinary budget forecast. The difference is that it also shows how much you have in the bank at the start and end of each month. A 10000 Apr Contract fees Council grant Sales Membership fees Bank interest Total Income Project Expenditure Apr Wages/salaries/NI Rent/rates Heat/light Stationery/postage Telephones Travel expenses Insurance Publicity/printing Cleaning/repairs Capital equipment Bank and Audit Contingencies 5% (1) Total expenditure Balance for month (2) Month-end balance (3) (or "balance carried forward") Notes: (1) If you are trading and expenditure is uncertain, you might make allowance for "contingencies" (2) The "balance for month" is "total income" minus "total expenditure" F. RISK OF CASH FLOW PROBLEMS - bank balance very low - this tells you that you need to check whether this is a temporary or long term difficulty by extending the period of expenditure 195 4090 -1495 8505 115 2410 185 8690 30 188 3943 4739 13429 115 2410 185 13614 115 2410 185 13799 30 243 5098 -2365 11434 368 7723 -5128 6306 214 4484 -1889 4417 E 1500 20 20 20 20 20 1000 20 30 3000 750 483 10233 -7494 -3077 214 4484 6480 3403 314 6584 -1620 1783 F 30 322 6752 -1770 13 30 2500 30 30 30 30 50 50 125 25 2200 May 2200 Jun 2200 1100 150 25 180 50 50 50 25 25 Jul 2200 Aug 2200 Sep 2200 1100 250 25 180 50 100 100 125 40 2595 2595 75 20 75 20 2500 8505 May 2500 8690 June 2500 6000 75 20 87 8682 2595 2595 75 20 75 20 75 20 138 2733 D Oct 4100 Nov 4100 Dec 4100 1500 400 40 230 100 100 100 2000 40 40 Jan 4100 Feb 4100 Mar 4100 1500 400 40 230 100 Total 37800 5200 1200 575 30 900 2000 5000 300 3000 840 2886 59731 E. -9197 ADVANCE WARNING OF TEMPORARY CASH FLOW PROBLEM - The minus figure at the end of December means you will be overdrawn at the bank this month. 2595 2595 75 20 75 20 75 20 44 2639 10964 4964 B 13429 July 2500 13614 Aug 2500 13799 Sept 2500 11434 Oct 2500 6306 Nov 2500 4417 Dec 2500 -3077 Jan 4800 6000 144 20 144 20 144 20 18 4982 C 3403 1783 13 A. Feb March 4800 4800 Total 36900 12000 1107 240 287 50534 C. Figures show income when it will be received, not when it is due: here you allow for income from a new contract to be delayed till January, although expenditure on the project started in October. You have also allowed for the council grants due in April and October to be late. B. Starting balance for the month: the bank balance at the start of the July, for instance, is the "month-end balance" carried forward from June. Opening bank balance
This example shows how the cash flow forecast can give advance warnings of problems at the bank when a project wins new contract work and starts to expand Starting balance ("balance bt. Forward") Project Income
D.
Figures show expenditure when it is paid out: here the work on a new contract causes the salary bill and other costs to rise in October, even though payments for the work will not arrive for several months.
(3) The "month-end balance" is the "starting balance" plus the "balance for month"