Cash Flow

**signature** · 27-09-2009, 08:46 PM

Hello
How do you calculate cash flow for a new business? What things do you need to take into account etc, any help appreciated!
Thanks
Antony

**greedyboy** · 27-09-2009, 08:47 PM

A profit and loss spread sheet for the year carrying the balance forward. Hard to explain but no doubt if you google it you will get a template.

**signature** · 27-09-2009, 08:50 PM

Quote:

Originally Posted by greedyboy

A profit and loss spread sheet for the year carrying the balance forward. Hard to explain but no doubt if you google it you will get a template.

Even for a business that does not exist yet?

**greedyboy** · 27-09-2009, 08:52 PM

Of course!

Even more important part as it tells you what you have to make to keep your head above water!!!

**signature** · 27-09-2009, 10:45 PM

Maybe ive said the wrong thing or I'm just being thick but how much then would i know how to start with?
Say i have a £1000 how would i do a cash flow forecast for the future???

**greedyboy** · 27-09-2009, 11:02 PM

Exactly as I said, a p/l spreadsheet.

Lemon Blossom · 28-09-2009, 12:25 AM

For a new business it sometimes helps to work out what you need to make in the way of net profit first, this means that you will then be able to calculate how much you need to sell, thus in turn your purchases, and don't forget to calculate your overheads.

It does seem like an odd way of doing it, but it is a good way of seeing how things need to pan out and if it is attainable... Also, by making sure that you do it on a spreadsheet using formulas you can amend the figures and see the likely outcomes.

Also, once you have this basic information, you can see where you need to spend more money, and cut back on costs. Just make sure you add in the information that you know is true.

Please be cautious if you are strictly sticking to a p&l to work out your cashflow as they are two very different things, I could make £100 profit, but still not have any cash due to that computer I bought. You need to list all of your income from all sources if a loan is to be paid into the business put that into your cashflow, if you are putting capital into the business include that. Then list all of your outgoings, this includes any assets you will be purchasing or drawings you will be taking from the business.

I hope this helps, if you can make sense of my rambling that is.

TAP · 28-09-2009, 01:51 AM

Quote:

Originally Posted by signature

Hello
How do you calculate cash flow for a new business? What things do you need to take into account etc, any help appreciated!
Thanks
Antony

You would need to do a cash flow forecast. If you have £1000 to start with, you forecast your sales and costs for the month and end up with a closing balance, which is bought forward the following month.

For example: Opening Balance (Sep) £1000 + £1000 (sales) = £2000 (in the bank), Outgoings: £500 (stock), £100 (P&P), £100 (overheads).

£2000 - £700 = £1300 (closing balance).

In Oct you start with £1300 in the bank and so on. Simply get it on a spreadsheet.

Lemon Blossom · 29-09-2009, 12:19 PM

Quote:

Originally Posted by TAP

You would need to do a cash flow forecast. If you have £1000 to start with, you forecast your sales and costs for the month and end up with a closing balance, which is bought forward the following month.

For example: Opening Balance (Sep) £1000 + £1000 (sales) = £2000 (in the bank), Outgoings: £500 (stock), £100 (P&P), £100 (overheads).

£2000 - £700 = £1300 (closing balance).

In Oct you start with £1300 in the bank and so on. Simply get it on a spreadsheet.

Good point, all my rambling didn't mention doing it on a monthly basis and carrying forward the balance..