A Cash Flow forecast takes the month by month sales, purchases and expenses, and converts them into when the money comes in and goes out.
A Cash Flow will also take account of other cash issues, for example: bank loan repayments and assets purchased and sold.
Timing Issues
When you prepare the month by month plan, you begin to appreciate timing issues. For example you may make a sale in May, but not receive the money until June. So in the Profit and Loss Account, the sale appears in May, but in the Cash Flow the sale appears in June. These timing differences also occur with expenses: some expenses, eg. salaries are paid in the month, whilst your rent may only be paid quarterly – but would need to be spread across 3 months in the Profit and Loss Account.
OX SYSTEMS has pre-prepared Business Plans which will speed up this process for you. Please contact us for this service.
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