SELLING YOUR BUSINESS .... SIMPLIFIED
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REF 152
OBJECTIVE
To give step by step guidance on how to use the BiZ Cash Control Program to control income and expenses "Hands On".
BUDGET WORKSHEET PURPOSE:
The budget worksheet serves as a control tool to provide standards for evaluating cash flow performances.
The cash flow budget is used to determine anticipated cash inflows and outflows (cheques and cash payments) so that the business maintains the optimum level of cash flow. It also provides information whether or not additional financing is required to address cash flow shortfalls.
Our BiZ Cash Control Program is based on waiting for funds - cash-basis accounting: With cash-basis accounting, you record all transactions in the books when cash actually changes hands, meaning when cash payment is received by the company from customers or paid out by the company for purchases or other services. Cash receipt or payment can be in the form of cash, check, credit card, electronic transfer, or other means used to pay for an item.
STEP BY STEP:
1- "Cash Inflows" - Five lines are available to accommodate your specific need - Anticipate all cash inflows that your business will be receiving for each month of the financial year. Please note that the program is designed to work in financial years starting in March and ending February - this will help you to give the relevant information to your accountant for tax purposes.
2- If you start to use the program during the course of the financial year start budgeting in the month that you currently in up to February leaving the other months blank.
3 - "Cash Outflows" - Thirty lines are available to accommodate your specific need - Anticipate all cash outflows your business will need to pay for stock (cost of sales) and all other operating expenses for each month of the financial year.
Please note: The description of the income and expenses can be changed to accommodate your specific need.
OPERATING SUMMARY:
The Budget is the starting point of the BiZ Cash Control Program because all the cash inflow and the cash outflow accounts and the budgeted amounts entered in the budget are automatically carried over to cash book and bottomline report.
At the bottom of the budget the differences of the total cash inflow and the total cash outflows are calculated, and provision is made for you to enter the opening funds balance please.
Please note should you start using your budget program for example in August the opening funds amount available must be entered in white cell provided in March month the amount will be carried forward to be applicable in the month your budget has been started.
The monthly surplus or deficit balances are then added / deducted from the funds balances to calculate the closing fund balance.
The closing fund balance are calculated accumulatively to reflect the future cash funds availability.
CASH ENTRY WORKSHEET
PURPOSE:The cash entry worksheet serves as a tool to capture cash entries.
STEP BY STEP:1 - "Other Party" Type in the name of the customer or supplier where purchases was made e.g. Mugg & Bean in cases where more than one transactions will be entered you can enter "Various" in this space.
2 - "Method of payment" - Select whether the transaction went through the Bank -cheque account (e.g if payment was made via a transfer or cheque), petty cash of other (e.g. if the purchase was made via credit card)
3 - "Date" - The date needs to be changed to the date of your first transactions to be posted in the cash book. For a late transaction of a previous month change the date to the date of the transaction. The computer hold the date of the last transaction posted.
4 - "Ref no" - To give the transaction a unique reference number for e.g. the cheque number
5 - "Description" - Here you can describe the transaction e.g. Client Name "E. Xample"
6 - "Amount" - Enter the amount that you received or paid - cash entries posted are automatically carried over to cash book and bottomline report
7 - "Category" - Select/ Type the category as defined in the budget e.g Entertainment
8 - "Methodology" - Ten lines are available to expedite your cash entries. Select all the transactions for the the specific payment method and post them simultaneously after completion of all the relevant descriptions and selection of the relevant cashbook accounts in the dropdown selection
BUTTONS:"POST ENTRY" - Saves the details of the cash entry in the Cashbook - Clears the screen
CASHBOOK PURPOSE:
The cashbook serves as a basic tool to monitor your actual cash flow and to provide your accountant with a detailed transaction listing. It also includes a bank and petty cash control in order to reconcile your bank account and cash available.
STEP BY STEP:1 - All inputs to the sheet are done via the Cash Entry sheet
2 - You can edit all transactions on this sheet
3 - The description entered on the Cash entry sheet will appear as a note on the cashbook and will be visible if you mouse over the cell
4 - The autofilter tool of excel is activated on this sheet to simplify viewing of transactions.
5 - Enter the opening balance of the bank account and the petty cash. The pay ins, pay outs and current balance are pre-programmed cells.
BOTTOMLINE REPORT PURPOSE:
The Bottomline report will help you to determine if your business's prosperity is still on track.
It consists of the following sections
Variances:
The sales variance shows your target you still need to achieve for the rest of the year.
The expenditure variances show how much money you still have available to use for the rest of the year.
The dropdown box situated at the top left next to the description columns enable you to choose an option to manage and monitor your business performances daily, monthly and year to date.
VARIANCES:
Layout and Descriptions:
Actuals to Date: Reflects the actual receipts and payments as captured in the Recordkeeping tool
Yearly Budget: Reflects the anticipated receipts and payments as captured in the Cash Flow Budget
Variance to date: Is the difference between the actuals and the budgeted figures
Operating expenses: expenses of the business paid by cheques or cash as defined in the Cash Flow Budget
Operating surplus /deficit: Sales income less – Stock purchase and Operating expenses.
The monthly / year to date variance surplus / deficit balance of the bottomline report is a very important viability indicator! (If positive well done but if negative rectifying finance control action is required)