![]() ![]() That also means that if you can’t reclaim VAT on a particular cost such as business entertaining, or if you’re on the VAT flat rate scheme, you should include that VAT as part of your day-to-day running costs in your profit and loss forecast.īut when you come to draw up your cash flow forecast, you need to put your receipts and payments in there inclusive of VAT, because those are the amounts you’re actually going to take into, and pay out of, your bank account. If your business is registered for VAT, you need to make sure that your sales forecast and profit and loss forecast are drawn up with the figures excluding any VAT that you’re going to charge to your customers and reclaim on your costs. 3) Should your figures be inclusive or exclusive of VAT? Include as many costs in your profit and loss forecast as you can remember and don’t miss any out just because they’re small it’s surprising how fast all those small costs mount up!ĭon’t miss out costs for which no cash physically leaves your business’s bank account either, such as depreciation, business use of home, or mileage travelled on business in your own car. ![]() However, it’s easy to leave day-to-day running costs out of your profit and loss forecast, particularly small costs such as monthly software subscriptions, or delivery costs, and that may have a negative impact in the long run. You’re not trying to predict the future you’re trying to give your business the best possible chance of survival, and to see when you might be able to make changes. 2) Include as many costs as you can rememberĪ cash flow forecast isn’t expected to be accurate to the penny. The payments by customers will come later, when you draw up your cash flow forecast. When you’re working out how much you expect your sales to be each month, for your sales forecast, remember to add these up on the basis of the work you do and how much you expect to earn each month, not how much you expect to be paid by your customers each month. NB It’s good practice to draw up three forecasts for your business a sales forecast, a profit and loss forecast, and a cash flow forecast, which all feed into and from each other. So, for example, if you wanted to know what would happen if you started offering a new service, or if you took on a new member of staff or rented a new office, you could adapt your forecast to show you if you can afford to do this and what your would finances look like if you did. Forecasting also gives you the opportunity to plan ‘what if’ scenarios for your business. ![]()
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