'Cash sales' means all income from your main business activity which is received at the time of sale. Your cash customers will be members of the public who would not generally want to set up an account with you.
While some of your customers may pay you in cash, remember that Cash sales can also include:
- debit and credit card payments
- bank transfers - perhaps from corporate customers who use your services regularly
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, work out roughly how many bookings you are likely to receive and how much each one will be worth to you.
There are a number of things to consider when you make your estimates.
Type of business
Give some thought to exactly how your business will operate:
- who will your customers be - if you are planning to target the dinner party end of the market, you may expect to be cooking for relatively small numbers in other people's homes. If you are planning to target weddings and corporate events, you'll find yourself cooking for large numbers of people
- will you have a maximum number of bookings that you will do in a week? You will have to work out what level of work you and your staff will be able to cope with. Don't forget that catering for a big event will take a lot of planning beforehand, including visits to the venue to assess facilities, ordering and preparing the food, setting up the venue and so on
- will you offer a broader service than just providing the catering
You will need to give a lot of thought to your menus to ensure that you are able to cater for all of the customers in your target market. You should be able to provide a variety of hot and cold meals as well as buffet options. You should also try to be flexible to meet customers' dietary needs.
Your main business is providing catering. You should decide what type of events you will be able to cater for (for example weddings, dinner parties and so on), how much you will provide (for example crockery/cutlery, staff and so on) and how much you will allow customers to provide (for example their own drink)
Think about pricing:
- what will your pricing policy be (you must be able to cover your costs, overheads and drawings)
- how often will you review your prices
- will you insist on a deposit
- will you ever offer discounts and special deals
You may well find that certain times of year are busier than others. The 'wedding season', for example, is likely to keep you busy and occurs over the spring and summer months. Bear this in mind when you make your estimates of monthly income.
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.