'Cash sales' means all income from your main business activity which is received at the time of sale. While many of your customers may pay you in cash, remember that Cash sales can also include:
- cheques - you might accept these from large groups making a single payment (or a deposit and then a final payment)
- debit and credit card payments
- vouchers if you participate in an externally operated scheme (for example from 'experience' gift specialists like Red Letter Days or 'daily deal' websites like Groupon or Wowcher) or if you operate your own scheme
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 work out the number and type of customers you will have, the prices they will pay and when you will receive the money.
There are a number of things to consider when you make your estimates, such as:
- how busy your centre will be. It is probably unrealistic to assume that you will be at full capacity all day, every day of the year so you will have to estimate when your quiet and busy times will be. Factors to take into account include the day of the week and time of day, seasonality, the timing of school holidays, as well as less obvious things like the most popular times in the year for getting married (karting is a popular stag party event) and so on. If your centre has only an outdoor track, you may not open at all during the winter months
- how much you will be affected by local competition
- your pricing policy. You may decide to set your prices broadly in line with your competitors, particularly if there is a lot of local competition, or you may feel that your centre offers something special that justifies higher charges
- will you offer discounts and promotions - perhaps for large group bookings or at quieter times such as during the working week
- how much income you will receive from non-core activities, such as selling food and drink, operating a retail outlet that sells karts and karting accessories, offering mechanic services to kart owners and so on
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.