Cash Flow Forecast

Tidy up your accounts

If your business accounts are untidy, there are steps you can take to get them in order:

1. Hire a professional: Consider hiring an accountant or bookkeeper who can help you organise your financial records. They can ensure that your records are complete, accurate, and up-to-date.
   
   

2. Set up an accounting system: Implement an accounting system that is appropriate for your business & ensures that all financial transactions are recorded accurately and in a timely manner.
   
   

3. Reconcile bank statements: Ensure that your bank statements are reconciled with your financial records on a regular basis. This will help you to identify and correct any errors or discrepancies.
   
   

4. Review and categorise transactions: Review all transactions and categorise them correctly, so that you have a clear picture of your income and expenses.
   
   

5. Keep track of invoices and receipts: Keep a record of all invoices and receipts, as they are crucial in establishing your business's financial position.
   
   

6. Seek advice: If you are unsure of how to get your records in order, seek advice from an accountant or financial adviser. They can help you to understand your obligations and provide guidance on how to meet them. You may be able to save on costs by asking if an accountancy junior could help you or using a freelance bookkeeper. 
   
   If you have no money to pay for a professional, you may find that family or friends can help with this. Not many free sector agencies help with this but if your turnover is 20k or less, you may be able to contact TaxAid for help.

Order your expenses & receipts

To order your UK business receipts and expenses, you should follow these steps:

1. Gather all receipts and expenses: Collect all the receipts and invoices for your business expenses, including bills, bank statements, and credit card statements. Arrange everything in date order for the tax year you are working on.
   
   

2. Categorise expenses: Group your expenses into categories, such as rent, utilities, supplies, advertising, and travel. This will make it easier to complete your accounts and monitor what your business is spending. 

3. Preserve receipts and paper records: If you have a faded purchase receipts, make sure to check the entry on your bank statement and preserve a copy of the receipt by saving a digital copy.
   
   

4. Record expenses in a spreadsheet or accounting software: Use a spreadsheet or accounting software to record your expenses. This will help you keep track of your spending and ensure that all your expenses are accounted for.
   
   

5. Add receipts and invoices: Attach copies of receipts and invoices to the relevant expenses in your spreadsheet or accounting software. This will help you keep a complete record of all your expenses and make it easier to find specific expenses if you need to in the future.
   
   

6. Reconcile bank statements: Review your bank statements and make sure that all your recorded expenses match the transactions listed on the statement.
   
   

7. Review and update regularly: Regularly review your expenses and make any necessary updates to ensure that your records are accurate and up-to-date.
   
   

8. Keep records for tax purposes: Keep all your receipts and invoices for at least six years, as HM Revenue & Customs may ask to see them if they need to check your tax return.

Untidy accounts - penalties

If you fail to keep financial records for your business in the UK, you may face several penalties and consequences, including:

1. Financial penalties: HM Revenue & Customs (HMRC) may impose fines for failing to keep accurate records. The amount of the fine will depend on the severity of the violation and the size of your business.
   
   

2. Tax investigation: HMRC may initiate a tax investigation if you do not have accurate records to support your tax returns. This can be a time-consuming and costly process, and you may be required to pay back taxes and penalties if errors are found.
   
   

3. Difficulty in claiming expenses: If you do not have adequate records of your expenses, you may not be able to claim them as deductions on your tax return. This can result in a higher tax bill for your business.
   
   

4. Loss of credibility: Failing to keep accurate financial records can damage your business's reputation and credibility, making it more difficult to secure funding or attract new customers.
   
   

5. Legal liability: If you do not have adequate records of your financial transactions, you may be at risk of legal liability in the event of a dispute or lawsuit.

Set up a spreadsheet

A spreadsheet is a useful tool for creating a simple budget, as it allows you to easily track your income and expenses and calculate your spending and savings.

Formatting a spreadsheet for accounts involves setting up the columns and rows in a way that makes it easy to enter and manage financial data. 

Here are some steps to help you format a spreadsheet for accounts:

1. Define the columns: Start by defining the columns that you need to store your financial data. Common columns for an accounting spreadsheet include date, description, debit, credit, and balance.
   
   

2. Set up the headings: Enter the headings for each column in the first row of the spreadsheet. Be sure to use clear, concise headings that accurately describe the data that will be stored in each column.
   
   

3. Define the currency: Set the currency format for the debit and credit columns. This will ensure that any amounts you enter in these columns are automatically formatted as currency values.
   
   

4. Define the date format: Set the date format for the date column. This will ensure that any dates you enter are automatically formatted in a consistent manner.

Excel: Select the cells that contain the dates that you want to format > Right-click the selected cells and choose "Format Cells." > In the Format Cells dialog box, select the "Date" category > Select the date format that you want to apply to your dates > Click "OK" to apply the date format to your selected cells.

Sheets: Highlight the data that you want to format > Click Format > Select Number > Click Custom date and time > Search in the menu text box to select a format > Click Apply.

5. Set up the formulas: Set up formulas in the balance column to automatically calculate the running balance for each transaction. For example, the formula in the balance column for the second row might be "=B2 + C2".
   
   

6. Apply conditional formatting: Apply conditional formatting to the balance column to highlight any negative balances. This will make it easy to see when you have overspent in a particular category.

Excel Video - Conditional Formatting

Sheets Guide - Conditional Formatting

7. Freeze the first row: Freeze the first row of the spreadsheet so that it remains visible as you scroll down the sheet. This will make it easy to refer to the headings as you enter data.
   
   Excel: Tap View > Freeze Panes, and then tap the option you need.

Sheets: Tap View > Select how many rows or columns to freeze.

8. Save the template: Save the spreadsheet as a template so that you can reuse it each month to record your financial data.

Spreadsheet Formulas

Here is a simple guide to some common spreadsheet formulas that can help you create a basic budget:

1. Define a range of cells: In a spreadsheet formula, a range of cells is a group of adjacent cells that you want to include in a calculation. To specify a range of cells in a formula, you simply need to specify the first and last cell in the range, separated by a colon.
   
   

For example, if you have a column of numbers in cells A1 to A10, you can specify this range in a formula by writing "A1:A10". This tells the spreadsheet to include all the numbers in cells A1 to A10 in the calculation.

You can also specify rows or columns in a similar way.

For example, if you have a row of numbers in cells A1 to J1, you can specify this range in a formula by writing "A1:J1".

It's important to note that when specifying a range in a formula, the cells in the range should be adjacent to each other. If the cells are not adjacent, you will need to specify each individual cell in the range instead.

2. Common Formulas:
   
   SUM: The SUM formula is used to add up a range of numbers. For example, if you have a column of expenses, you can use the SUM formula to calculate the total amount spent. The formula is written as =SUM(range of cells).

AVERAGE: The AVERAGE formula is used to calculate the average of a range of numbers. For example, you can use this formula to calculate the average monthly expenditure. The formula is written as =AVERAGE(range of cells).

IF: The IF formula is used to perform conditional calculations based on whether a certain condition is met. For example, you can use the IF formula to determine whether your spending is above or below a certain budgeted amount. The formula is written as =IF(condition, value if true, value if false).

MIN: The MIN formula is used to find the lowest value in a range of numbers. For example, you can use this formula to determine the lowest monthly expenditure. The formula is written as =MIN(range of cells).

MAX: The MAX formula is used to find the highest value in a range of numbers. For example, you can use this formula to determine the highest monthly expenditure. The formula is written as =MAX(range of cells).

IFERROR: The IFERROR formula is used to handle errors in a spreadsheet formula. For example, you can use the IFERROR formula to return a value or message if a formula results in an error. The formula is written as =IFERROR(value, value if error).

3. Transfer data to other cells & sheets: 

To transfer an amount from one cell to another in a spreadsheet, you can simply use a formula that references the cell containing the original amount.

For example, if you have an amount in cell A1 and you want to transfer it to cell B1, you can use the following formula in cell B1:

=A1

This formula tells the spreadsheet to display the same value that is in cell A1 in cell B1. Any changes made to the value in cell A1 will automatically be reflected in cell B1, as the formula in cell B1 is linked to the original value.

If you want to transfer the value from cell A1 to another sheet or another workbook, you will need to use a different formula that specifies the location of the target cell. For example, to transfer the value from cell A1 in the current sheet to cell A1 in another sheet named "Sheet2", you can use the following formula:

='Sheet2'!A1

This formula tells the spreadsheet to display the value in cell A1 of the "Sheet2" sheet in the current cell.

It's important to note that when using formulas to transfer values between cells or sheets, the target cell must be formatted to accept the value that is being transferred. For example, if the original value is a number, the target cell should be formatted as a number.

4. Calculate a percentage: 

To calculate a percentage in a spreadsheet, you can use a formula that divides the numerator by the denominator and multiplies the result by 100.

For example, if you have a numerator in cell A1 and a denominator in cell B1, and you want to calculate the percentage that A1 is of B1, you can use the following formula in a third cell:

=(A1/B1)*100

This formula tells the spreadsheet to divide the value in cell A1 by the value in cell B1, and then multiply the result by 100 to express it as a percentage.

You can also use the formula to calculate the percentage of a change. For example, if you have an original value in cell A1 and a new value in cell B1, and you want to calculate the percentage change, you can use the following formula:

=((B1-A1)/A1)*100

This formula tells the spreadsheet to subtract the value in cell A1 from the value in cell B1, divide the result by the value in cell A1, and then multiply the result by 100 to express it as a percentage.

It's important to note that when working with percentages, the values in the cells should be formatted as numbers, not text or dates. This will ensure that the formula calculates the correct result.

These are just a few examples of spreadsheet formulas that can help you create a simple budget. With a little practice and some basic knowledge of spreadsheet formulas, you can easily create a budget that works for you.