Cash, as we know is King in any business. A positive cash flow shows you’re paying attention and keeps the financial health of your business high. A negative cash flow on the other hand, doesn’t necessarily mean your contractor business is doing bad, it might mean you’re not paying attention to where your cash is going each month; i.e. got a relative on the payroll that you don’t really need? If you find you are constantly “robbing Peter to pay Paul” every month, this cash flow forecast template will help you review your cash flow, take an in depth look at payouts and help you determine which expense line items you can trim down to turn a negative into a positive.

Download the Template

First, SCORE, a division of the Small Business Administration offers an easy to use cash flow template. Visit their Financial Statement Template Gallery. scroll down and find the Cash Flow Statement (12 Month) click on “View” to download. This file is in a MS Excel 2003-2007 format, however if you have MS Excel 2010, it will work on that version as well. Once you’ve mastered this form, they also offer a 3-year cash flow forecast template.

Once you have the cash flow forecast template opened, click on “Enable Editing” to start working on this form.

Find Your Cash Flow

It’s important to note the template is already formatted for calculations—you only need to add the numbers and the template will automatically calculate your monthly cash flow. Now on to the worksheet!

Beginning Cash Balance – Make sure the number you enter here is your true cash bank balance after you’ve reconciled your bank account.

Cash Receipts – Fill in these amounts and don’t forget to enter sales to credit (A/R) customers as well as monthly sales and receipts or any other cash inflows for the month.

Cash Paid Out – Here you’ll find there are already popular expense line items. Most of these you will have expenses for, however, you can add expense line items easily by typing over an unused expense line item or adding a row. To add a row: If using Excel 2003-2007, on the top menu bar click on insert and then click “Rows.” If using Excel 2010, on the right hand side you’ll find an “Insert” tab; click on that and then click on “Insert Sheet Rows.” TIP: Make sure your cursor is within the expense area before you add rows. The rows you add will automatically calculate in the totals section. Now enter your monthly expenses.

Once you’ve entered all the cash incomes and expenses, you will quickly see if cash is indeed a positive or negative for a particular month.

Where Do I Get the Numbers?

Most contractor businesses use some sort of accounting software. Print out your most recent profit and loss (P&L) statement and utilize these numbers (or get them from your accountant). Don’t have a profit and loss statement? SCORE also offers a free template for a P&L statement in their Financial Statement Template Gallery. You must insert true numbers so if you’re a one-man operation keeping your books by hand, you should still be able to determine how much you paid out, to whom and determine where the expense number falls; e.g. is it advertising, payroll, etc. As far as sale, receipts and A/R customers, you can also find these numbers on your P&L.

Analyze, Forecast and Adjust

Once you have your first month done, you can do one of two things. Use the cash flow forecast template to help you determine cash flow each month or use it as a projection tool. If you choose to use it as a project tool, you will have to “estimate” cash inflows and outflows.

Projecting cash flow is also important because once you see where your cash is actually going via a one, two or three months analysis, you can use the cash flow forecast template to help you “adjust” expenses.

For example, say you find your advertising expense is taking a big bite out of your bottom line. To adjust this expense for the next month, take a look at where your advertising dollars are really going and ask yourself if you are really achieving the return on investment for newspaper, radio and TV spots, pay-per-click advertising and other ad venues. If you’re spending $2,000 a month on newspaper ads alone and you’re cash flow is always negative, it might be time to adjust where you spend ad dollars to gain a bigger bang for your buck—maybe the newspaper ads aren’t working?

Do this for every expense line items—see where the cash is going, analyze it and then see if you can “adjust” the expense. In reality, adjusting expenses means reducing them and if you’re always seeing a negative cash flow, this template will help you to see what your biggest expenses are and some of them you may have to cut. Cutting expenses is the tough part but in a tight economy you really need to dig in and find ways to trim them.

Cutting Your Advertising Expense

At Sunrise Signs, we like to provide tips on keeping your business healthy financially and if you do find after analyzing your cash flow you need to cut expenses, we bet advertising will be one of your first choices.

Unfortunately, you must advertise to gain customers so instead of paying out high dollars for advertising mediums that don’t work, why not consider contractor work vehicle wraps and graphics. Because vehicle wraps last up to five years and are a one-time investment—not a repeating expensive newspaper ad, you will find these are more affordable than any other advertising method out there.

3M, a manufacturer of vinyl wrap materials says, “A company would have to spend $130,000 in advertising dollars to achieve the same effect as one $3,500 vehicle wrap.” And, because one contractor work truck or van wrap can gain up to 70,000 visual impressions per day the number of potential customers is much better —what other ad venue can say the same? With fleet wraps, you are turning your all-white contractor van or truck into a 24/7 moving billboard that never sleeps even when parked!

Expense cutting is never easy but choosing contractor fleet vehicle wraps will help to reduce your advertising expenses—download our free Vehicle Wrap ROI Calculator to learn just how much you can save.

Once you’ve mastered the cash flow forecast template, be the master of your cash by projecting realistic incomes and expenses or use the template to determine where the money is coming in from each month and where your expenses are flowing to each month. Very often, a simple tool such as this template can help to open your business eyes, help you adjust areas where you’re spending too much and have positive cash flows.

SCORE offers many business templates and they are all free so utilize them to help change the financial health of your business.

Finally, once you realize your ad dollars are just going out the window and producing no sales revenues, contact Sunrise Signs and let us show you how contractor vehicle wraps will increase sales at a fraction of the cost you’re paying in advertising expenses.