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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Managing Director

Jonathan trained as a chartered accountant with Price Waterhouse (now PWC) in Liverpool before becoming a small business services manager for Grant Thornton in Warrington. He also spent three years as the financial controller for Brookside and Hollyoaks (not that he ever mentions it!).

Jonathan is recognised as a specialist in the entertainment industry and is often called upon to provide training courses and seminars for media professionals. He's also a bit of a technology geek and has been recognised with the accountancy industry as one of the most progressive accountants in the UK.
Outside of work Jonathan is very proud to be the Treasurer of the Tim Parry Johnathan Ball Foundation for Peace and to be on the Council of the Liverpool Institute of Performing Arts (LIPA)

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