Dividing annual revenue by twelve creates a smooth line, not a plan. Ramadan, back-to-school, tourist seasons, stock renewal or a B2B customer on 60 days move cash. The model must tell when money moves and why.
The indispensable lines
- Reconciled opening balance.
- Sales and collections by channel.
- Purchases, stock and supplier payments.
- Payroll, rent and fixed overhead.
- VAT, tax and social charges on expected dates.
- Investment, loans, owner inputs and drawings.
- Scenarios and maximum financing need.
1. Build receipts from operating drivers
Separate volume, average price, season and delay. Convert cash sales to settlement by card, cash, marketplace or delivery. Push B2B invoices into their probable collection month and apply realistic delay. Keep tax-inclusive cash in the cash view, then prepare the corresponding tax outflow.
| Driver | Assumption | Cash translation |
|---|---|---|
| Footfall | tickets × basket | Cash by payment rail |
| Contracts | planned invoices | Collection lag |
| Season | monthly index | Peak and trough |
| New site | gradual ramp | Not 100% in month one |
Label every assumption source: history, signed order, test, capacity or target. A target is not as reliable as an order book.
2. Make irregular outflows visible
Variable costs may follow sales after a purchasing lag. Rent, payroll and subscriptions follow their dates. Tax, VAT, insurance and annual charges create spikes. Equipment and principal repayments consume cash without being the same as profit-and-loss expense.
| Outflow | Basis | Trap |
|---|---|---|
| Stock | Purchase plan and lead time | Copying cost of sales |
| Suppliers | Real due schedule | Omitting opening payables |
| VAT/tax | Validated calendar | Using a crude sales percentage |
| Investment | Price and deposits | Confusing with depreciation |
| Loan | Interest plus principal | Forecasting interest only |
Bring existing receivables and payables into month one. A plan starting only with new sales often misses the largest immediate pressure.
3. Create three genuinely different scenarios
Central uses the most defensible assumptions. Prudent reduces volume and delays collections while retaining committed spend. Stress adds a named event: stock break, large customer 30 days late, margin fall or urgent equipment. Do not reduce every line by one percentage.
- Choose three to five sensitive drivers.
- Write central values.
- Define a plausible prudent change.
- Define one precise stress.
- Recalculate low point and date.
- Identify the first pressure month.
- Prepare actions before it.
- Name who triggers each action.
Financing need is the maximum deficit plus minimum reserve and setup costs. Discuss it with the financier and accountant; the model does not guarantee approval.
The plan is neither profit nor a promise
It is a cash scenario based on assumptions. Preserve the trail from assumption to formula, version and decision.
4. Turn it into a rolling plan
Each month, replace the closed month with actual and append a new month. BelloPOS can feed sales history, basket, payment method and stock. Accounting, bank, tax, payroll and financing complete the plan.
- Actual: locked and reconciled
- M+1 to M+3: operational detail
- M+4 to M+12: drivers and scenarios
- Variance: cause and assumption change
- Decision: owner and date
Present one summary page: closing cash, low point, low-point month, reserve, maximum need and three assumptions explaining the outcome. Keep detailed lines behind it.
Mistakes to avoid
- Dividing the year by twelve.
- Putting sales and collection in one month.
- Omitting opening items.
- Confusing investment and depreciation.
- Making three identical scenarios.
- Never replacing forecast with actual.
Frequently asked questions
Should the plan use amounts including or excluding VAT?
Cash follows what actually moves; isolate tax so its later payment is forecast and it is not treated as free cash.
How many scenarios are enough?
Three often work: central, prudent and a named stress. Too many variants obscure decisions.
How should seasonality be included?
Use comparable history and real events, and explain every manual adjustment.
When should financing be requested?
Before the first pressure month, allowing implementation time. Discuss conditions and alternatives early.
Does BelloPOS make the complete plan?
It supplies operational drivers. Bank, tax, payroll, debt and investment flows complete the model.
What to take away
A useful plan shows the month and cause of the lowest cash balance, then rolls forward every month with actuals.
Sources
The figures and rules quoted above come from these pages, read on the date given in the article.
Build the prudent scenario first
If it survives delayed receipts and committed spending, the central case becomes more credible.
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