I'm putting together a cashflow forecast starting with actual cashflow. Would all receipts and payments be inclusive of vat with every quarter the vat being paid out or would they all be net as the vat you have received isn't really yours and the vat on purchases overstates how much you have trully paid out.
That's what I went with, it makes a lot of sense when it comes to actual cash flow. You have the cash available in real terms until you give it to HMRC.
Hi Steve Cashflow forecasting is done differently from the P&L in that you forget your accrual accounting and enter your data as literal cash in and out, so if your sales include VAT then the gross figure is how much customers will pay you and this therefore affects the balance of cash you hold, even though you owe some of it out again to the VAT man idc. A good idea to help a company budget is perhaps to show the VAT due going out on a monthly basis in the CFF to a 'savings' account - just stops them thinking - way hey I have loads of cash so lets spend spend spend.
You can also sensitise a CFF - eg push out suppliers receipts and bring forward payments to show the impacts such things/lack of control can have.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
