Cash flow Projection

[peaceoneday]

Hi

I am doing a CF projection and was wondering do i include VAT payments in it?

Got a meeting with a bank manager and need to have it water-tight! The accounts of the business show a net profit of 120K but im not getting that amount when im doing the VAT payments in XL...what am i doing wrong?

Any advice?

Thanks

 

[Moneyman]

Net off the total vat as a line. you will possibly pay it once per quarter but by having it as an item every month. it will even out your figures and not obscure your trading performance.
It is being too clever when you have the money coming out every quarter and you will show a loss that month even when things are good and obscure problems in bad months. It can make you underestimate the cash requirement as it puts too much emphasis on the month it is paid.

 

[200386]

Hi

You should include the VAT payments in your cash flow projection, as you are showing the movement of cash within the business. VAT payments are excluded from profit projections. Usually the figures on the cashflow projection and profit projection do not match, as the profit projection includes sales and expenses invoices for the accounting year, whether paid or unpaid.

I hope this helps.

Computaccounts

 

[RAL]

Possible that you are mixing two different reports i.e. profit and loss accounts and cash flow forecast.

P & L will include all the items for income and expenditure, payroll cost (salart wages, er's nic, pension etc)


While cash flow includes, all the payments you make to your supplier, receipts you received from your customer. (This includes vat) Capital expenditure, loan received or paid, Vat payment or refund, paye payments, dividend payments, capital introduced etc.

While depreciation will be included in P & L but will not be included in Cashflow forecast as it is just an accounting entry. Same Capital expenditure will be included in Cashflow but it will not be included in P & L.

PM me, if you want me to have a look at your CF with your email.