Forecast your cash flow | Ulster Bank

First, you’ll need to input some general information about your business such as a starting bank balance and marginal rate of tax (if applicable).

Next, choose the sales and overhead categories relevant to your business from the drop-down boxes and input when you pay invoices and receive payment in respect of your sales.

You’ll need to ensure you have your previous Profit & Loss to hand for the next part. Inputting these details month by month at the outset will provide a basis for you to create cashflow and P&L forecasts.

Once you’ve done this you can create your own scenarios, using the "P&L Percentage Changes" and "P&L Actual Changes" sheets which allow you to add, month by month, how much you think your sales and costs will change as a result of coronavirus.

You can either use percentages or actuals, but not both. Using these tabs, you could help answer these sorts of questions:

1. Will your sales fall by 20% in month 3 compared to last year's month 3?
2. Will your purchases go up by 10% if you had to buy new stock in?

Why a profit and loss forecast is useful:

1. Having a view of how much profit you expect your business to make allows you to estimate how much tax you’ll be liable for in future
2. If your profits fall (or costs rise) you could be at increased risk of running out of cash. You may need to raise your prices or borrow some money to mitigate this risk.

The "VAT percentages" sheet pulls the usual VAT percentage for that category, as set by you on the "Categories" tab, to apply monthly to your P&L figures so that they show inclusive of VAT on the cashflow forecast.

This sheet is editable, which lets you adapt your VAT figures. For example, if you benefit from the 5% reduction set by HMRC for the hospitality industry, change your VAT percentage from 20% to 5% for the appropriate months.

You can now look at the "P&L Forecast" and "Cashflow Forecast" sheets to see the results of your changes, such as:

• What happens to your cash if you pay your suppliers 1 month later?
• Do you run out of money if your customers pay you a month more slowly?
• How quickly will you use up your cash if your costs go up and your sales go down?

The "P&L Forecast" sheet also shows how much your profit will change year-on-year, comparing the forecast to last year's figures, both in actual pounds and in percentages.

The "Cashflow Forecast" sheet contains a rough approximation of tax based on your monthly profit.

It also has yellow rows where you can enter cash receipts and payments that won't be on your P&L, for example, loan repayments, or money you've taken out if you're a sole trader or partner.

For the more visual person, the "Graphs" sheet enables you to see quickly how your sales, gross and net profit, and cashflow, will change.