Task 3: Prepare a Cash Flow Estimate

You are required to produce a cash flow estimate from your completed cash book. The cash flow forecast required is a three monthly projection and can be used as evidence to meet any requirements of financial backers.

3.1 Refer to Cash Flow Forecast template  and complete all entry projections for the month of December/ January and February. For assistance of evidence, you are required to refer to notes provided within the Cash Flow Forecast.   

3.2 On completion of the cash flow forecast you are required to discuss how this information can be implemented for the benefit of the management of your company. 

3.3 You are required to regularly monitor and report on the financial targets as per your completed financial plan. You have a bi-monthly meeting with your accountant and directors, after reviewing your financial targets have reached the cash flow forecast developed, you will be required to answer the following:

a.  Explain whether the cash flow forecast was a success or failure.

b.  How were the progress payments received with regard to cash flow?

c. Is there any need for investment in assets to grow the business:

d.  Is there any need to invest in staff or improve with training?

e.  Is there any requirement for changing/ improving opportunities within the marketplace?

3.4 On completion of the review with your accountant and directors, there is a recommendation to implement a day to day financial maintenance strategy. Discuss what methods may be used and how you would implement and communicate these methods.

Task 4: Develop a Credit Policy

4.1 Develop a credit policy – complete the following Simple Credit Policy (small construction projects up to $20,000) to manage your debtors for financial survival.  

Small Construction Projects up to $20,000

Terms of conditions: 

Conditions of payments: 

Invoice process: 

Variations: 

4.2 List four (4) methods of monitoring/reporting and four (4) contingencies you would implement to maintain the above policy.

4.3 An ongoing part of financial management involves an overall review of business policies and processes, to ensure outcomes are being met to and the business is viable over time. Describe how you would record, review and communicate the financial outcomes against the business priorities.

4.4 Discuss your methods of communicating the overall financial status of your business to various stakeholders. Nominate your stakeholders and what information they would normally require to ensure they have the necessary information to advise the ongoing success of your business.

Task 5: Monitor Financial Performance

5.1 Monitor Financial Performance.  You are required to calculate and evaluate your cash flow forecast as per current industry benchmarks. For the three monthly cash flow forecast calculate the total incomes and total expenses then apply to the gross profit margin.  

You may use the ANZ calculator for assistance 

(http://www.anz.com/aus/Small-Business/Tools-Forms-And-Guides/Benchmark-Your-Business/Gross-Profit-Margin/default.asp):

Or use the formula provided (rounding up of figures is permitted):

Gross profit margin = Gross profit (Income – expenses) x 100 = Answer% Income

5.2 If the projected average benchmark from the ATO was at 35% discuss in comparison with the figures you have produced: