The Cash Flow Worksheet

financial items

As I discussed in a previous post, the Cash Flow Worksheet from the financial side of the company is the windshield.  It allows us to look forward.  Business owners and finance pros use this weekly tool to forecast cash sources and uses.  It dramatically helps predict cash flow opportunities and see cash landmines down the road.  It will provide excellent data points for improvement and helps you improve forecasting your results.

For most of the companies I work with, cash can be tight.  We watch it carefully, managing it to minimize interest expense and see cash crunch holes.  The cash flow tool I use for the process is mostly manual, but straightforward and only takes about 30 minutes per week to update and review.

Let’s take a closer look.  Download the 13 Week Cash-Flow-Tool.

The worksheet is broken out into three distinct sections by week. Billings, Cash Receipts, and Cash Disbursements.  12 months of cash disbursements are forecasted by week with 100% of the accounts payable accounted for with estimates made for recurring payments, forecasted operating expenses, production costs, and  inventory needs.  Use forecasted manufacturing and cost of sales percentages, if that makes sense for your business.

It is updated weekly with actuals compared to estimated figures to improve forecasting.  After a few months, it gets much easier.  Develop an easy process to get actual numbers on Monday for the prior week’s activity.  For companies I work with, I have them complete a daily report to track cash ins and outs.

Worksheet Details

  1. Billings– Forecast your weekly billings,  by customer or business segment (helps if it’s not too detailed.)
  1.  Cash receipts: You need a methodology for forecasting your cash receipts.  Predicting cash receipts depends on the type of business. It can be relatively simple and straightforward if you have 10 prime customers or it can be complicated with 100+ customers.

In either case, predicting cast receivable turnover is not an easy task.  I generally use a 6 week rolling average of accounts receivable turnover, but for most cases larger customer activity needs to be considered. Focus on reducing overall Days Sales Outstanding (DSO)–the return here can be huge.

  1.  Cash Disbursements 

Look at your accounts payable and actual payment history over the last few months.  Establish estimated weekly amounts and due dates by summary category.

Operating expenses

  • Payroll
  • Medical benefits
  • Occupancy
  • Rent
  • Taxes
  • Insurance
  • Principal and interest – debt schedule for each
  • Lease payments
  • Marketing
  • Travel
  • Etc.

Inventory and Cost of Sales Items

  • Product for sale
  • Material
  • Production Costs
  • Outside services
  • Packaging
  • Freight out
  • Other Cost of Sales costs

Capital expenses

  • Equipment purchases
  • New product development expenses
  • Other business investments

The worksheet rolls cash forward each week.  Comparing to actual results weekly improve forecasting accuracy.  Any negative cash weeks will need to be cured with a draw on your lines or delay in payments. This is where you spot cash crunch holes and address shortages well in advance.

Here is a sample Cash Flow Checklist that you can use to develop your own process.

Contact me for help in setting up processes that work for you!