Pobal Community Services Programme 2014
Business Plan Guidance note on
Cash Flow Statement
This is an informal introductory note to the topic of preparing a cash flow statement, drafted to assist
Community Services re-contracting in 2014. It is, we hope, also useful for other community service
companies and co-ops in reviewing their plans. This note has been drafted to provide initial guidance
only and is not a comprehensive or definitive guide.
1. Purpose of a cash flow
A cash flow forecast is a standard tool to help organisations plan and manage their income and
expenditure. It is a normal part of any business plan for both commercial and non-profit companies.
It normally covers a 12 month period – but it is good practice to up-date this on a monthly basis and
present it to your board as part of the management accounts.
Cash flow and public funding: a cash flow forecast is particularly suitable for organisations in
Ireland that obtain grant funding from public sources. Grant payments to you and your subsequent
expenditure of this funding are typically accounted for on a cash basis, rather than an accrual basis.
This means that a cash flow statement is doubly useful – and this is explored in section 3 below.
Cash flow and the Community Services Programme: a cash flow statement is useful for various
reasons, including all of those above. Because CSP provides a contribution only to your costs,
therefore you are reliant on other sources of income. You need to be assured that your company or
co-op has sufficient working capital (cash flow) to cover your operating costs and to meet your
obligations as they fall due, and that public funds are not at risk.
2. How to complete a CSP cash flow template
A cash flow is a basic management tool, and a Community Service company or co-op staff member
(or in some instances, a board member) will be able to complete a cash flow without recourse to the
services of your accountant or auditor. If cash flow forecasting is, however, new to you or seems
overwhelmingly difficult, here is one method employed by a voluntary organisation known to us.
Step 1
 First, gather your bank statements and records for your last financial year.
 Go through each month and work out what money went in and out of your accounts in that month.
Record the amount of income received and expenditure paid out in the month by category/type of
expenditure.

Add rows to the cash flow statement if necessary to account for all of your income and
expenditure.
Do this exercise in some detail – even if this is tedious, this will be the worst of it. Remember that you
are accounting for the month in which money actually left or entered your accounts. And not when an
invoice was received or issued. The result is that you will get a picture of the last financial year.
Step 2
Look now to your current year template and put these side by side.




What differences in income do you expect? And what differences in the timing of income do you
expect?
Look at your expenditure. What changes are you expecting in your expenditure? And what
differences in timing do you expect?
In this way, complete your 2014 cash flow forecast.
Remember to include actual figures in the template for the months in the year to date (January
etc) prior to completing the Cash flow projection that will form part of your business plan.
Step 3
Once you have your forecast income and expenditure,
 You need to include the opening cash balance amount as at the beginning of the year as a
starting point for the month of January in your cash flow statement. This figure should include all
cash balances on hand and in the bank as at the end of the previous year. This includes any cash
not banked and all bank balances held by your organisation. The bank balances used should be
the closing bank balances as per the bank reconciliation statement completed for each bank
account at the end of the previous year.
 You also need to include the closing cash balance for each month of the cash flow. This will show
you whether you have sufficient funds to meet estimated expenditure for each month of the cash
flow statement.
 Create a copy of your forecast to up-date with actuals each month.
 Compare your actuals with your forecast and see / understand where there are variances.
This will help hone your forecasting skills. If you have good Microsoft Excel skills you can put your
forecasts and actuals on the same sheet. So that’s two columns for every month- it’s slightly
complicated but useful.
3. Uses for your cash flow statement
A cash flow statement is an effective budget management tool in that it will clearly highlight variances
on a monthly basis from both an income and payments perspective. It also gives an estimated end of
month cash balance which allows your organisation to determine whether you have enough cash to
pay bills as they fall due.
It is a common failing in Pobal grantees that their books and records detail expenditure minutely in
their books and records, but do not detail income. It is important for your budgeting, your public
accountability and (most importantly) to assure yourselves that all monies due are received and
banked intact, and that your books and records are set up to identify each receipt by income stream.
Your cash flow statement should use these same income streams as main headings – and that will
assist you in monitoring whether your company is meeting its income generation targets, and to
monitor variances in income generation year on year.
Overall, your cash flow forecast, up-dated monthly with actuals against forecast, offers a
comprehensive overview of financial performance which should be a standard item of your
management accounts and presented to each board meeting.
More reading…
http://www.wheel.ie/content/budgeting
http://knowhownonprofit.org/how-to/how-to-set-up-a-cash-flow-forecast-in-a-spreadsheet