World Fence News

world fence news • august 2016 • 31 Visit Logical Decisions at www.ldi.com Your Gate Operator Specialist Find us on You must include whatever reve- nue sources your company "earns its living from." Finally, these forecasts must be compared to actual receipts and ex- penditures as they become known – hence, there should be two columns in your cash flow spreadsheet: "es- timated" and "actual" in columns 1 through 3, for example, and columns 4 through 6 could use only the "esti- mated" heading. Each column has an "estimated" heading. Complete the forecast start- ing with the anticipated revenues for each week, which may be calculated by reviewing history. Points for consideration: • What were the revenue totals for last month? • Are there going to be any factors that will substantially increase or de- crease revenues this month? • Individual expense line items should be filled in for each week of the accounting period using historic numbers. • Due dates of payroll, lease pay- ments, rent, utilities, trash removal, etc. All these payments are entered into the appropriate week they will be due. • Normal vendor payments for deliveries/supplies will be listed and totaled, by week, on a separate sched- ule and entered as a line item called "accounts payable." • Complete each week's forecast and you will have a week-by-week forecast of planned cash requirements. Do this for each accounting period. Every cash flow forecast should cover a minimum of six weeks. There will normally be fluctuations from week to week and some weeks may be negative. However, the cumulative cash flow should be positive. • Actual receipts and expendi- tures are to be posted at the end of each week. These receipts and expen- ditures must be reviewed and changes made in subsequent weeks to allow for variances. You will now have a measure of your forecasting ability versus actual cash flow. Variances should be ana- lyzed and adjustments made to subse- quent forecasts as needed. The more you use cash flow fore- casting, the more accurate your fore- casting ability will become. End of each week At the end of each week the actual receipts and payments are entered in the appropriate column and the sheet is printed and presented to the owners, and the president. After comparing the actual to the estimated, the first column is removed and a new column is entered on the end. In this way you are always look- ing at results six, 12 or 16 weeks from today. This sheet is also printed and presented to the president. It is the duty of the office manag- er to create or supervise the creation of the six weeks cash flow, update it every week, and provide the results to the president. If the forecast is dele- gated, the office manager must ensure its accuracy before presentation to the president. It is the president's duty to make adjustments according to the cash po- sition of the company and inform the office manager as to what payments to make and when. Any new vendors or clients are to be added to this list as soon as the first order is placed. A cash flow forecast spreadsheet will only be helpful to the owner or president if the person creating the cash flow spreadsheet is accurate and honest in his or her estimations of in- come and expenditures. In the beginning, a cash flow fore- cast is like a big financial "guessing game," but the "more you play the game," the better the person creating the cash flow forecast spreadsheet will become at it, and the more accu- rate and reliable the spreadsheet will become. Conclusion By using this procedure on a reg- ular basis the president will always be aware of the company's current and future cash position. This procedure will allow the president to make long-range plans to protect the assets of the company. The single most important tool that the president can possess is infor- mation regarding the flow of cash in and out of the business. Long-term or lingering cash flow deficiencies must be addressed by reduction of overhead and of direct continued on next page

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