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Introduction to this document

Cash requirements report

When you go on annual leave the directors may worry that the company will run out of cash in your absence or fail to pay key suppliers. How can you set their minds at ease?

Comfort zone

The directors have asked you to spell out exactly what the company is spending its cash on and want you to: (1) prepare a report to present at their next meeting; and (2) reassure them that there will be enough money in the bank to pay key bills on time in your absence. How can you summarise the position in a way they will easily understand?

With a Cash Requirements Report you can concentrate on the key bank movements scheduled to occur in your absence. You should divide the report into separate columns for receipts and payments. If you’ve more than one account, then you will need to include receipts and payments columns too.

Just in case someone needs to go back to the documentation, include in your cash report the purchase ledger invoice reference against which the payment is being made.

Further comfort

For key suppliers you can set up BACS payments in advance to go through by the due date. This will give the directors confidence that key suppliers won't be chasing them for payment.

Restrict any discretionary payments (by cheque) the directors may feel they need to make to the “Posted but as yet unpaid invoice file”. However, set a monetary cap, e.g. total of £3,000, on these to keep within your cash flow projections.

Do warn the directors (in writing) of any suppliers which are due for payment but that you are still in dispute with or just awaiting credit notes from. This will prevent a supplier from accidentally being overpaid and avoid extra work for you in getting the money back.