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Designing
A Cash Flow Worksheet
There
are a variety of ways a cash flow forecast can be structured. To gain the
optimum benefit, it is recommended that it be structured to show only cash
received from operating revenue, and the proceeds from sales of company assets,
if appropriate, in the revenues portion of the worksheet.
On
occasion a template will show a slot for proceeds of a term loan in this
section; this may, however, take away from the value of the cash flow as an
indicator of the business’ operating performance and of the cash flow’s
ability to clearly show the real amount of working capital needs. If a fixed
term loan amount is treated as revenue to the business, the balances carried
forward each month cannot accurately reflect how the business is earning money
(unless the reader takes the additional step of subtracting the loan proceeds
from the equation).
Your
general format should allow a column along the left side of the page for the
account headings, then two side by side vertical columns for each month of the
year, beginning from the month you plan to open (e.g. the first dual column
might be labelled April Planned and April Actual etc.). From there, the cash
flow worksheet breaks into three distinctive sections. The first section (at the
top left portion of the worksheet, starting below and to the left of the month
names) is headed Cash Revenues (or Cash In). The second section, just below it,
is headed Cash Disbursements (or Cash Out). The final section, below that, is
headed Summary of Cash Flow.
Simple
Example:
In
this example, even though at the end of the year there is cash surplus, in
month’s 2, 3, 4 and 7 have cash deficits.
Financing will be necessary for those months.
If the business is unable to obtain financing for whatever reason, then
the business needs to consider other options, such as delaying certain
expenditures in these months or having the shareholders provide sufficient cash.
A Chartered Accountant can help your business design a cash flow budgeting system. Contact Keith Anderson CA at (780) 447-5830 if you need advice.
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