Up Your Cash Flow / Goldstein 76-80

80 PAYMENT OF EXPENSES: 4 methods of determining how bills will be paid

Alternative 1: Assume that all expenses are paid during the months they are incurred.

Alternative 2: Take a look at each expense item on the profit and loss budget, then decide when that expense will be paid.

Alternative 3: Assume a certain percentage of the bills incurred each month will be paid during the month incurred, a percentage in the first month following that month, and a percentage in the second month following that month incurred.

Alternative 4: To add more precision to Alternative 3, you could actually take your total expenses for a given month, subtract all those payments that you know will be paid during the month incurred, and then compute the balance left in the manner indicated in Alternative 3.

Other Receipts: When doing your cash flow forecasting, it is necessary to assume the inflow of any additional funds that come either from investors, bank loans, sale of assets, or any other source. It is important to know when these amounts will be received to apply them to your projections for the proper month.

Additional Payments: ...necessary to include in your forecast any additional cash being disbursed for deposits, purchase of assets, down payment on the purchase of assets, principal payments on loans outstanding, payment for deposits of income taxes, payroll taxes, and any other cash out-flow you feel will be incurred during the period you are forecasting.

Words of Caution---seek professional help.