Each Frostpine Loans article takes one Goshen, IN or Elkhart County, IN cost at a time. The cash flow notes here cover ways a hardware store can improve cash flow, the steps of a payroll-based forecast for a machine shop, and an invented 13-week forecast for an RV trailer supplier.
How can a business improve cash flow? Thinking it through for a hardware store’s stock in Elkhart County, IN
A store’s cash position gets better in three ways: customers pay sooner, bills are paid later, or less money waits on the shelves. In an invented hardware store in Elkhart County, IN, much of the cash sits on the shelves as fasteners, paint and plumbing parts, so the levers are mostly about stock and accounts:
- Reorder from sales history, so items that rarely sell tie up less cash
- Ask suppliers for longer invoice terms on large orders
- Bill contractor accounts on a set schedule and follow up on anything past due
- Keep a short list of planned costs, such as a new paint-mixing machine, so they do not land in the same week as a large stock order
- Match the funding to the life of the cost: a credit line for stock that sells within weeks, a term loan for things that last years
For the stock itself, a line of credit can be drawn for a reorder and paid down as the goods sell; inventory financing fits a single large order.
How to prepare a cash flow forecast around payroll at a Goshen, IN machine shop
- Start from the cash in the bank today, not from the profit on the last statement
- Enter every payday in the forecast period, with the gross payroll and the employer taxes
- Add customer payments on the dates each invoice falls due, not the dates the parts ship
- Add material orders, rent, utilities, and loan and lease payments on their due dates
- Carry each week’s closing balance into the next week
- Mark any week where the balance drops below the cushion the owner wants to keep
Payroll is the line a machine shop cannot move, so the marked weeks show the size and the date of any gap before the owner asks about working capital or a credit line draw.
A 13-week cash flow forecast for a Goshen, IN RV and trailer supplier
Illustration only, invented figures: a Goshen, IN supplier of trailer components starts with $36,000 in the bank, pays a biweekly payroll of $18,600 in weeks 1, 3, 5, 7, 9, 11 and 13, and is paid by the RV plants it ships to on invoice terms, so cash in moves from week to week.
| Week | Cash in | Payroll | Materials and other costs | Closing balance |
|---|---|---|---|---|
| Week 1 | $16,000 | $18,600 | $9,800 | $23,600 |
| Week 2 | $21,500 | $0 | $4,200 | $40,900 |
| Week 3 | $9,000 | $18,600 | $12,600 | $18,700 |
| Week 4 | $24,000 | $0 | $3,900 | $38,800 |
| Week 5 | $18,500 | $18,600 | $6,100 | $32,600 |
| Week 6 | $0 | $0 | $15,800 | $16,800 |
| Week 7 | $7,200 | $18,600 | $4,400 | $1,000 |
| Week 8 | $14,000 | $0 | $5,200 | $9,800 |
| Week 9 | $23,400 | $18,600 | $11,300 | $3,300 |
| Week 10 | $30,800 | $0 | $3,700 | $30,400 |
| Week 11 | $16,100 | $18,600 | $6,900 | $21,000 |
| Week 12 | $25,300 | $0 | $4,800 | $41,500 |
| Week 13 | $20,600 | $18,600 | $7,600 | $35,900 |
In this invented forecast week 6 brings no plant payment and $15,800 of materials, and week 7 adds a payroll on top of only $7,200 coming in, so week 7 is the low point at $1,000. Weeks 7, 8 and 9 all close under the invented $10,000 cushion. In this invented forecast, a credit line draw of $10,000 in week 7 keeps each of those weeks above the cushion, and week 10, which closes at $30,400, can pay it back. Interest on that invented draw at 12.9% a year comes to $74.22, figured as simple interest over the 21 days it is out.
Business funding articles for Goshen, IN RV suppliers, auto repair shops and landscaping crews
Each article on this blog takes one cost and follows it through. RV supplier equipment loans prices a membrane press, a CNC router, frame jigs and a press brake lease. Lease or finance a forklift sets a rental, two leases and a loan side by side on total cost. Machines, stock or receivables covers what a plant or supplier can put up as collateral and how a UCC lien is released.
Auto and collision shop loans works through a measuring system, a spot welder and the parts for one large repair. Zero-turns and dump trailers prices zero-turns, a dump trailer and a crew’s fuel and repair bills. Payroll between orders sizes a working capital loan for a seven-week gap at an RV supplier.
By Frostpine Loans · Updated