March 27th, 2018

Preparing a cash flow. Here’s our top tips


If you need to borrow money then it’s likely you’ll need to prepare a cash flow. This helps to show you understand your business model and will reassure an investor that their money is safe.

It’s easy to get bogged down doing a cash flow but a simple one is easy to do. Here’s our top tips:-

  1. Do it early. Telling your bank manager you’ll be needing an overdraft in six months to help fund your growth is very different to telling them you can’t pay the wages tomorrow.
  2. Don’t forget the detail. It’s easy to put in round sum estimates but that shouldn’t be a substitute for some proper thought and planning.
  3. Phase your debt collection properly. There’s no point assuming your customers will pay you in 30 days if the reality is 90 days.
  4. Is your reporting period correct? When money is tight then a monthly cash flow won’t help. If your outgoings go out at the start of the month and your income comes in at the end then you could run out of money mid month. Consider doing a weekly or even daily cash flow.
  5. Don’t forget taxes. PAYE, VAT and corporation tax can all make a big difference to your figures. Ignore them at your peril.
  6. Get the presentation right. If you’re preparing a cash flow for a third party then it will help if you use a layout they are likely to be familiar with.
  7. Use a App. If you’re using software like Xero then you can use an add on to help. Personally I still like the flexibility of Excel but each to their own.
  8. Don’t forget loans and overdrafts. Often the purpose of a cash flow is to see when you could run out of money. In a cash flow a new loan is money in – a good thing!
  9. Make your assumptions clear. If you’re presenting your cash flow to someone else – like an investor or the bank – then make it easy to see what you’ve assumed.
  10. Sanity check it. It’s easy to get bogged down in the details. Take a break and look at it again with a fresh pair of eyes. Even better – get someone else to take a look and question you on it.
  11. Check it adds up. You’ll look like a fool if someone you’re depending on to lend you money is the first person to spot you’ve got your sums wrong.

If you need help preparing a cash flow or a full business plan then get in touch.  Our team of expert accountants  are here to help.

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Business advice Limited Companies Newsletter


John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys powerlifting and is a Liverpool FC season ticket holder.

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