Cash Flow

Forecast your bank balance and sleep better at night!!

Turnover is Vanity, Profit is Sanity, but CASH IS KING! Because  the cafe business is a 'Cash Business' i.e. you get paid straight away for your goods, unlike most other businesses where you spend a lot of time chasing your debtors, it's often easy to forget about those blips in cash flow that affect everyone. Wages, VAT, rent, month end, supplier bills, unexpected maintenance bills & poor trading periods can quickly become a big issue if you don't keep a close watch on your cash balance.  You must have a system to do cash flow projections, there is no easy way to do this, although there are some websites that will help you for a monthly fee, or of course a good accountant. The best way is to have a simple spreadsheet, into which you can put in your projected sales and estimated costs going forward. It takes a little bit of work to keep up but it will help you sleep at night! There is a Cash Flow Forecaster Excel Template in the download area to the right, here are a few hints and tips to help you complete it.

  • Check your Bank every day, you can use their own software but to take full control and manage credits and debits, money management software like Banktree can be very useful.
  • Reconcile all your invoices against the supplier statements, and challenge any that are incorrect to get any credit.
  • All Petty cash purchases and 'cash on delivery' receipts to be checked.
  • Check every delivery thoroughly, making sure the person doing the check ticks each item and quantity and clearly writes on the delivery note if there are any mistakes. Make sure any credits due are claimed and received. Ensure the person doing the checks signs the delivery note so that you know who is responsible.
  • Beware of Bank Holidays and weekends, as banks like to reserve payment going out on the next working day!