Industry sector: Retail and wholesale

Art gallery: Cash sales


'Cash sales' means all income from your main business activity which is received at the time of sale. Income that is received a month or more after the sale has been made is 'Cash from debtors'. While some of your customers may pay you in cash, remember that Cash sales can also include:

  • credit and debit card payments
  • vouchers
  • payments made through online services like PayPal
  • banker's drafts and money orders (these might be a useful means of payment for international customers if you have any, particularly when buying high value items)
  • bank transfers
  • cheques (if you accept them)

To prepare your cash flow, you need to estimate how much income you will receive over the next twelve months, including VAT. (For the purposes of the cash flow forecast, your income will be the commission you keep on the sale of a piece of art, not the full selling price of the item.) To do this you will need to work out how many pieces you are likely to sell, the level of commission you will charge on each piece and when you will receive the money. You will also need to decide what, if any, other services you will offer and how much income they will generate.

There are a number of things to consider when you make your estimates.

Sources of income

It is quite possible that your gallery's sales income will come just from the commission charged on the sale of pieces of art and/or from profits you make on pieces and other items (like prints, cards and giftware) that you buy in yourself to sell on. However, you may also have some other sources of income, such as sales from a café or restaurant. Maybe you're an artist yourself and you sell your own work elsewhere - possibly in other galleries around the UK and even overseas.

Pricing policy

It's important when setting the level of commission you charge that you make sure it's enough to cover your overheads but not so high that artists are put off from exhibiting in your gallery. Try to find out what other galleries in the area charge.

Seasonality

You may find that your sales income is affected by the time of year. For example, during the summer your customers numbers may increase due to tourists visiting your area. You may also experience an upturn in sales around Christmas time.

To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.