Masonry Magazine July 2001 Page. 32
WDP
Consulting Engineers
Specialists in masonry, concrete, materials, design, and diagnosis of problems.
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Manassas, Virginia 20109
Phone: (703) 257-9280
5555 N. Lamar Blvd., Suite K109
Austin, Texas 78751
Phone: (512) 467-8830
Internet: www.wdpa.com
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32 MASONRY JULY, 2001
JONES MASONRY
Cash Budget
For the periods...
Jan.
Feb.
Mar.
Estimated Cash Receipts:
Cash sales $48,000 $50,000 $53,000
Collections on
Accounts Receivable 74,000 76,000 79,200
Other receipts
(sales of Securities, etc.)... 5,200 4,400 3,700
Total cash receipts 127,200 130,400 135,900
Estimated Cash Disbursements
Inventory purchases 24,000 27,500 28,000
Expense Payments
(wages, advertising, etc.). 93,500 98,600 99,700
Other payments
(dividends, notes, etc.).... 5,000 8,500 12,000
Total cash disbursements. 122,500 134,600 139,700
Cash increase or decrease 4,700 4,200 3,800
Cash balance beginning
of month 25,800 30,500 26,300
Cash balance end of month 30,500 26,300 22,500
Minimum cash balance 25,000 25,00 25,000
Excess of (deficiency) $ 5,500 1,300 (2,500)
Realistically in the future. That cash flow budget will, for example, tell the masonry contractor months in advance that it will be necessary to borrow funds for payroll or fixed expenses in order to tide it over a slow period. That budget can also tell a contractor when additional advertising may be necessary to spur sales or when the hours of operation should be extended. Or, costs cut.
Every business decision is measured by the effect of that decision on the future net cash flow of the masonry operation the margin between receipts and outlays of cash. Using a cash flow budget or statement, the objective is to make the most cost-effective purchase, the most favorable course of action that will ultimately produce the greatest amount of cash flowing into the business.
Every successful business is based on cash. With it as the foundation, the masonry business can continue to grow. Without sufficient cash, it will fall apart. Without a cash flow budget or statement, the masonry contractor is left to run the business by the seat of his or her pants. Hardly the correct method for a smooth ride to profits.
Mark E. Battersby is a tax and financial advisor, freelance writer and columnist.