Industry sector: Business services

Office based: Cash sales

'Cash sales' means all income from your main business activity which is received at the time of sale. Although some clients may pay you in cash, remember that Cash sales can also include:

  • bank transfers
  • debit and credit card payments
  • cheques

To prepare your cash flow you need to estimate how much income you will receive over the next 12 months, including VAT, if appropriate. You will then have to decide how much of this income will be Cash sales and how much will be income you receive from clients that you invoice. Many office-based businesses are not cash-based and invoice most or all of their clients. So a substantial proportion of your income may well be 'Cash from debtors'.

There are a number of things to consider when you make your estimates, depending on the type of business you are planning.

Type of business

Give some thought to exactly how your business will operate:

  • who will your clients be? Will you target a particular category of client or will the services you will offer appeal to a broad cross section of the population
  • where will your premises be? Will you locate in town, or perhaps on an enterprise park? If you locate in-town, will you go for a prime site or a less expensive site in a suburban area
  • is passing trade going to be important, or will your clients search you out or be referred to you
  • will you share your premises with another business offering a related or complementary service
  • will you need to employ qualified staff, and will you need any support staff
  • will you use external consultants, or freelancers or self-employed sub-contractors on a regular basis
  • what will be your normal office hours

Your services

Think about your range of services, including 'core' services and 'ancillary' and added-value services:

  • what range of services will you offer
  • will you provide your clients with goods as well as services
  • will you need to visit your clients in their premises
  • will you be making disbursements on behalf of your clients
  • will you be aiming for exclusivity or will your business offer services already available in your area
  • what record-keeping systems will you introduce to make sure you receive all the income you're entitled to

Charging for your services

There are a number of ways in which you might charge for your services, for example:

  • an hourly fee. In many firms the hourly fee varies according to how senior is the member of staff doing the work
  • a fixed fee. Firms use this method when the nature of the work is fairly routine, so that a reasonable estimate of the cost of doing the work can be made beforehand
  • on a percentage basis. For example, an estate agent might charge around 2% of the value of the property sold
  • on a commission basis. For example, an insurance broker might be entitled to 10% of the value of motor insurance premiums paid by the client

Whichever method you will use to charge for your services there are a number of issues to consider:

  • at what level will you set your fees. In many cases large firms charge higher fees than small ones, and London firms are more expensive than similar firms elsewhere. Your fees may have to reflect the local going rate
  • if you plan to supply goods as well as services - for example, an IT consultant might also supply hardware - what mark-up will you apply to the cost of these goods
  • will you offer discounts (it may be that you will have little control over the remuneration you receive - for example, if, as an agent, you are entitled to a fixed percentage of the value of a transaction. However, you might offer your customers an incentive out of this commission in order to boost sales)
  • how often will you review your fees

Don't forget, the fees you charge must be enough to cover your costs, overheads and drawings. If you set your fees too low you will not earn enough, but if you set them too high clients won't use you.

Only enter in the cash flow income which actually belongs to you - for example if you arrange insurance for clients the premiums do not belong to you while the commission you earn does.


In many sectors the independent business faces very strong competition from major concerns with outlets around the country. The buying power and resources of these companies means they can:

  • afford prime sites
  • price competitively
  • achieve consistently high standards
  • advertise nationally
  • employ high calibre staff
  • offer a wide range of services

This can make it difficult for the independent to compete. You should make sure that your business will offer something special that will attract clients to your firm rather than to your competitors.

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.