Preparing a Hybrid Simplified Cashflow

by Adam Marlow

Preparing a Hybrid Simplified Cashflow

During the Corona Crisis, the Marlow Proactive team have been involved in applying for several Coronavirus Business Interruption Loans, also known as CBILS. 

As part of these applications, the bank will normally request what is known as a ‘3-way forecast’ which is the Profit & Loss Account, Balance sheet and Cashflow Forecast which all need to balance with each other.

This is almost impossible from a standing start using MS Excel as you need to deal with the complexities of customer and supplier payments terms, Invoice Factoring timings, asset finance and similar intricacies. The best way to deal with this is to use specialist planning software programs but even then there’s a lot of hours required to get to the end result.

The alternative is to take a practical approach of preparing a hybrid simplified cashflow using the profit and loss account but removing the depreciation charges (as they are simply an accounting adjustment) but deducting any balance sheet payments such as the capital element of any loan or finance payments, capital equipment purchases, etc to arrive at an approximate cash surplus or deficit for the month, then apply the starting bank balance and therefore the monthly end bank balance. From this, we can then look along this cash surplus/deficit line in the report to find the worst bank balance position and thus determine the loan needed to shore up this shortfall.

To date, we have helped raise over £1m and we expect this to rise especially with the start of the Bounce Back loans scheme which opened on Monday 4th May for loans of up to £50,000 on an almost ‘self-certify’ basis with very little information required to support the standard application form. If you would like to read about a recent CBILS application we undertook for a local plumbing business, then please click here to read the case study on our website.

If you need help with applying for a Coronavirus Business Interruption Loan or need help with getting tighter control over your business finances then please contact us on 01530 833474 or email adam@marlow-proactive.co.uk

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