How to make a Flow of Box

8 January 2009 - 17:56

The Flow of Box is a financial report that show the entrance flows and debit of cash that has obtained a company.

Examples of cash income are the collection of invoices, collection of loans, obtained collection of interests, loans, collection of rents, etc.

Examples of cash debits are the payment of invoices, payment of taxes, payment of pays, payment of loans, payment of interests, payment of services of water or light, etc.

The difference between the income and the debits of cash knows as balance him, which can be favorable (when the income are majors that the debits) or unfavorable (when the debits are majors that the income).

Unlike the State or Cuenta de Resultados, the Flow of Box shows what really it leaves or in cash enters “box” like, for example, the collections of a sale that really were made cash. In the Flow of Box, the term gain or loss is not used.

The importance of the Flow of Box is that this one allows us to know the liquidity the company, that is to say, to know with how much of money in cash tells, so that, with this information we pruned we made decisions such as:

• how much we can buy of merchandize.
• if it is possible to buy cash or he is necessary or preferable to ask for credit.
• if he is necessary or preferable to receive cash or is possible to grant credits.
• if it is possible to pay debts to his date of victory or is necessary to request a refinancing or a new financing.
• if we have a surplus of sufficient money like being able to invest it, for example, when acquiring new machinery.
• if it is necessary to increase the available one, for example, for a possible opportunity of investment.

The Projected Flow of Box

In order to make a Flow of Box we must count on the information on the income and cash debits that have realized the company, to this we obtain it information from the accounting that we have realized.

But also we can make a Projected Flow of Box (also known like Budget Cash), for which we will need the projections the future income and debits of cash that will realize the company for a period of certain time.

The importance of making a Projected Flow of Box is that it allows us, for example:

• to anticipate to us to future deficits (or lack) of cash and, that way, for example, to be able to make the decision to look for financing opportunely.
• to establish a solid base to sustain the requirement of credits, for example, when presenting/displaying it within our plan or project of businesses.

We see next a simple example of how to make a Projected Flow of Box:

A manufacturing company account with the following data:

• projections of sales: January: 85000, February: 88000, March: 90000, April: 92000.
• projections of the purchase of consumptions: January: 47000, February: 51000, March: 50000, April: 52000.
• the sales are 40% cash, and 60% to 30 days.
• the purchases are realized cash.
• a loan of the bank by 40000 is obtained, which is due to pay in quotas of 5000 monthly ones.
• the expenses of administration and sales are 20% of the projections of sales.
• projections of the payment of taxes: January: 3080, February: 2710, March: 3260, April: 2870.

In the first place we elaborated our budget of accounts to receive (this because the total of the sales does not acquire the same month in which they are realized, but the month in which they are realized, and 60% to the following month are received a 40%, and when elaborating a Flow of Box, like or we have mentioned, we must register the cash that really enters to or leaves the company):

Budget of accounts to receive

	January	February	March	April
Cash sales (40%)	34000	35200	3900	36800
Sales on the credit to 30 days (60%)		51000	52800	54000
TOTAL SALES	34000	86200	88800	90800

Projected flow of Box (Estimated of cash)

	January	February	March	April
CASH ENTRANCE
Accounts to receive	34000	86200	88800	90800
Loans	40000
TOTAL ENTRANCE IN CASH	74000	86200	88800	90800
CASH DEBIT
Accounts to pay	47000	51000	50000	52000
Expenses of adm. and of sales	17000	1790	18000	18400
Payment of taxes	3080	2710	3260	2870
TOTAL DEBIT IN CASH	67080	71310	71260	73270
ECONOMIC NET FLOW	6920	14890	17540	17530
Service of the debt	5000	5000	5000	5000
FINANCIAL NET FLOW	1920	9890	12540	12530

Labels: Concepts, Accounting, Finances, Tools of business

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