KeyPlay Business Solutions

KeyPlay CashFlow Statements and Forecasts - Where did the Cash Go ?

A cashflow statement can be an extremely powerful tool for any organisation, but do you really know what the figures are telling you? We would like to help you understand the various aspects of the KeyPlay cashflow statement  so that you can appreciate how it works. You can then apply the same principles to your business. Cashflow is KING and always will be. Once you have read the following descriptions, please download our Excel KeyPlay Cashflow spreadsheet. Click here to download the spreadsheet and email our office for an unlock code. The situation in the picture to the left must be the goal of any successful business. But it is only acheived via the successful implementation of all the areas in our  Business Improvemnet Hub.   Jamie Johns

1. Operating Receipts
Operating receipts have nothing to do with revenue, they are simply the cash that has been received in relation to the business's core operations.

2. Operating payments
Operating payments relate to cost of goods sold; purchases & materials, sub-contractors etc. These payments are directly relevant to the business's operating receipts.

3. Expenses
General expenses relating to the running of the business. These are also operating payments.

4. Operating Surplus/(Deficit) - The Life Blood !
After realising the operating receipts and applying the operating payments and general expenses against them, we arrive at the operating surplus or deficit. This figure is the absolute life blood of the business. It is critical that operating surplus is enough to fund the capital repayments a business has. See point 6 below.

 
The life blood - being the operating surplus/deficit (similar to net profit, but different), can only go three places:
1. Purchase of assets
2. Service of loans
3. Owners drawings & Income Tax

Notice these 3 items all belong to the balance sheet ? These 3 items are where your cashflow (or profit) has gone.    

5. Capital Receipts
These include money received from asset disposals, loan drawdowns and capital contributions from directors and the business owners own pockets.

6. Capital Payments
These include loan repayments, asset purchases and director's drawings or private expenses such as school fees, groceries and income tax.

7. Capital Surplus/(Deficit)
The difference between capital receipts and capital payments.

8. Overall Surplus/(Deficit)
The overall movement in your bank account(s).

9. Cash Position at the end of the period
In order to track the cash position of the business we need to start with the opening bank balance, apply the overall surplus/(deficit) which then reconciles to the closing cash balance. The total cash balance can include the main operating bank account, credit cards, cash draw etc. The KeyPlay Cashflow must tie back to the business's cash position.