When you buy supplies on account instead of paying cash there and then, your suppliers are your creditors until you pay them. Enter in your cash flow forecast payments you will make to any creditors (including VAT) in the months in which you will pay them. Do not enter in your cash flow forecast the cost of the machines that you will buy (including any replacements), as this is referred to as 'Capital expenditure' or those that you lease (include these in 'Leasing payments'). If your machines are supplied on a share basis (50% / 50% is usual, although this type of arrangement is far more common in non-specialist businesses like pubs rather than in arcades) also don't include here the percentage of net takings that is collected by the supplier each week, fortnight or month.
If your suppliers offer account facilities, you're likely to have accounts with:
- suppliers of spare parts for your machines and machine repairers
- wholesalers of gifts for redemption machines
- recorded music suppliers for your jukebox
- specialist catering wholesalers for your café or snacks sales
Setting up an account
If your suppliers offer you account facilities you may be asked to provide bank and trade references. Until the account facility has been granted you will have to pay for your order at the time you place it. This is known as paying on a pro forma basis.