- Complete Accounts
Payable planning in close
relationship to the revenues
expected from Sales/Fees.
For example
Very favourable payment terms at very low or
no interest can ease the burden on the
business and the expense of each month's
payment is reflected in the month that it
will be paid.
- Now that you have, your
total cash received and
cash payments estimated,
go to your Pro-Forma Cash
Flow Statement, (See
example below) and enter
your totals.
If, however, a large purchase is made at a
special price but must be paid for now, it
may not be a good deal if the goods will
not be used up for several months.
A very rough 'rule-of-thumb' would be, don't
buy more than you need for the next 60
days unless you are getting an additional
5% discount for each additional month
you will carry the product.
For example, if you were not going to use the
product up for 6 months, you would need
at least a 20% discount to make the same
Net Profit.
