'Cash sales' means all income from electrical work which is received at the time you complete a job. While some of your customers may pay you in cash, remember that Cash sales can also include:
- debit and credit card payments (if you decide to accept these)
- bank transfers - perhaps from larger clients like housing associations but possibly also from other customers
To prepare your cash flow, you need to estimate how much income you will receive over the next twelve months, including VAT. To do this you will need to decide on the services you will offer and how much you will charge for the work you do. You'll need to think about what proportion will be paid for there and then, and what proportion will be paid for on account. You will also need to estimate the amount of work you are likely to get.
There are a number of things to consider when you make your estimates.
Type of business
Think about the type of electrical services business you intend to run:
- will you work alone or will you aim to have a team of qualified electricians
- who will your customers be
- will you operate from home or have a separate office/workshop
- what hours will you work
- how far are you prepared to travel to find work
Perhaps you intend to work as a self-employed contractor to the construction industry and to get most or all of your work through a specialist agency.
Depending on your skills, qualifications and experience, you might decide to offer some or all of the following services:
- installation of domestic wiring, electrical fixtures and fittings in newly built houses (sometimes done on a sub-contract basis for a building firm)
- rewiring older homes (this might include replacing old electrical fittings)
- minor domestic work such as adding new sockets and changing light fittings
- domestic security installation services (for example putting in burglar alarms or security lights)
- installation of microgeneration technologies such as photovoltaic solar panels, combined heat and power (CHP) boilers, and small wind turbines
- house wiring safety checks for landlords who rent out residential property
- electrical services for retail outlets and other businesses
- contract services for organisations like local authorities and emergency services - many larger organisations have a number of properties to manage and require various testing, repair and installation services on a regular basis
- safety checks and maintenance at schools, hospitals or local authority buildings, including portable appliance testing (PAT)
- work for industrial customers (for example installing three phase electrical equipment, or heating, ventilation and lighting systems in a factory)
- other industrial work, such as data and telecoms network cabling, installing uninterruptible power supplies, and commercial alarm installation
Give careful thought to pricing:
- what will your pricing policy be (don't forget, you must be able to cover your costs, overheads and drawings)
- will you charge a fixed price per job or an hourly or day rate
- how will you cost your work
- how often will you review your prices
- will you offer discounts and special offers
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.