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Cashflow forecast Capital payments query

Discussion in 'Accounts & Finance' started by eyedee, Jul 16, 2008.

  1. eyedee

    eyedee UKBF Regular Free Member

    Posts: 13 Likes: 0
    Hi everyone.

    I am putting my cashflow forecast together and have stumbled upon a couple of questions I can't find the answers to...

    When calculating the monthly Capital payments (equipment purchases etc.) and considering many items are purchased from the internet and then delivered, can you include the postage costs for these items? As it is a cost that is connected to the purchase of the item for business use I guess you can include it, but I'm really not sure?

    Also, I understand that Royal Mail delivery is mostly VAT exempt, so if delivery costs can be included within Capital payments, you wouldn't include VAT for that delivery cost in the VAT section of the cashflow forecast. But what about couriered goods? From what I read, they are VAT payable at the standard 17.5%, so would that cost be included in the VAT section of the cashflow forecast?

    Sorry if this is deemed a daft/simple question but I am extremely new to the business "game" and my three dummy style starting a business books didn't help provide an answer.

    Many thanks
  2. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,870
    Hi

    Remember that cash flow is an estimate / budget and I would suggest that you include a contingency for errors, omissions etc.

    Postage is a tricky one as some do charge vat on it as it is postage and package! But you are right that royal mail costs are exempt.

    Postage can be included and should be included in your cash flow and I always suggest preparing the cash flow net of vat (if you are vat registered) as the net effect of the vat transactions will be nil.

    Don't know of this helps but unlike your accounts your cash flow forecast is an estimate of what you think will happen.
  3. eyedee

    eyedee UKBF Regular Free Member

    Posts: 13 Likes: 0
    Thanks Elaine, that's very helpful and good advice. I had thought about making sure a contingency plan was in place and it's good to know I wasn't too far off the mark. I am finding it rather difficult to predict the future financial figures at this stage as I have very little evidence of my own to go on, but I think I'm getting there. Thanks again.
  4. profitxchange

    profitxchange UKBF Regular Free Member

    Posts: 1,494 Likes: 157
    May be helpful to look up some of the cash flow software sites - they may at least give some of the headings you may have missed.
  5. Moneyman

    Moneyman UKBF Regular Full Member

    Posts: 2,616 Likes: 743
    Its a cash flow!
    Put in the flow of cash. Just stick it in where you think it should go. If you want it as a separate item, then do it. If you want to have it as part of the overall purchase cost then add it in. Either way dont ignore it.

    "If you pay it or get it, put it in"
    The important thing is to have the final figure as near as damn it correct.