Cashflow

A cashflow is the most important indicator as to how your business will survive,
especially over the first 12 months. If you run out of money, your business will not last
and a cashflow will help you assess when cash might be tight, so you can plan a solution
in advance (such as contributing more of your own money, borrowing money or
arranging an overdraft with the Bank). The absolute worst scenario is running out of
money and not being aware it was going to happen.
Tip: Its always a good idea to run all your figures
past your accountant before you present your
cashflow to outside readers such as potential
lenders or investors.
When preparing your cashflow remember:
that you have quickly made up. It will be the document
that anyone looking at your business will spend the most
time on. If part of this is weak, or you have no real idea
why you put the numbers in that you did, then outside
people will think what else is weak in your plan? As you
complete the cashflow, make notes as to the assumptions
that underline these figures. Then write them into the
additional notes so anyone reading your cashflow will have
some understanding as to how the calculations were
determined.
2. Your forecast for the business reflects a realistic balance
between proper market-driven sales projections (not
guessing!) and an accurate costing and pricing of your
goods and services. Even though you have not started yet,
the amount of time you spend on assessing a realistic
sales level is crucial. You should also outline exactly how
you came to the sales figures for each month (and dont
forget seasonality it is highly unlikely that you will have
the same sales level for all 12 months of the year).

Tip: Remember that just because you invoice out

$50,000 of sales in a month, you cant guarantee
that it will all be paid on time. For example you
might decide to estimate 80% of sales come in on time,
10% a month later, and 10% two months later (this is not a
problem if you are a cash only business such as a retail
business).
3. Once you have outlined the sales for each month, you
will then be able to estimate your costs. Again, you need
to explain in detail how you calculated these amounts.
Some costs can be actual (you can find out rent and lease
costs, set up costs like office supplies, advertising) and
some will be estimates (power and phone charges).
4. Check your capacity. If you state in your cashflow
$50,000 for a month, then can you physically do this? You
will only have a certain amount of hours in the day, or only
be able to deal with a certain number of customers.
5. Find out your industry information such as average net
profit and gross profit amounts. If you are different from
the average, people assessing your business will want to
know why.
6. Make sure your drawings are realistic. Do not take out
too much money, or too little (you have to live).
7. Do not forget one off items like accounting fees and
your tax obligations many businesses struggle to find the
cash to pay taxes when they fall due. It is very important
to get an accountant to help you estimate what your likely
tax obligations will be.
8. If you can, prepare at least two years of cashflow (it is
not recommended to prepare five years of cashflows, as it
is almost impossible to predict what will happen so far
ahead).

Cashflow forecast

Be prepared to defend your estimates on this basis:

Will I have enough working capital?

JULY
Expected

AUGUST

Actual

Expected

SEPTEMBER

Actual

Expected

OCTOBER

Actual

Expected

Do you have the capacity to generate the sales figures you've entered in the forecast?
Do they make sense considered against your expenses, proposed drawings, etc?
Have you taken seasonality into account?

NOVEMBER

Actual

Expected

DECEMBER

Actual

Expected

JANUARY

Actual

Expected

FEBRUARY

Actual

Expected

MARCH

Actual

Expected

APRIL

Actual

Expected

MAY

Actual

Expected

JUNE

Actual

Expected

Actual

RECEIPTS
Cash Sales
Credit Sales
Other Revenue

(A) Total Receipts

(B) Total cash payments

(C) NET CASHFLOW (A-B)**

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

(D) Opening bank balance***

Closing bank balance (D+C)

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

LESS PAYMENTS*
Wages
Drawings
Overheads (rent, power, etc.)
Marketing
Repayment of loans
GST payments
Income tax payments
Materials and stock
Other payments

This document is intended to provide general information only and should not be relied upon in substitution for professional legal and financial advice.
While due care has been taken in preparing this document, no warranty as to the accuracy of the information contained within this document is given.
No liability is accepted by any member of the ANZ Group of companies for any error or omission, or any loss caused to any person relying on the
information contained in this document, except where such liability cannot be excluded.

*
**
***

Enter all outgoing expenses including money spent on staff, you and the business.
The difference between the amount of money going out and the amount of money coming in.
Use the closing bank balance from the previous month as your opening balance here.