This option drives the debtors schedule. A percentage of collections can be entered if you have an idea of how your debtors pay, but of course the numbers can be overidden in debtors.
If the business has traded in the past then it is a good idea to enter prior months sales so that the model can smooth out the cash flow and take into account the sales before the start of the model.
If this does not give the desired effect or a realistic effect of your debtors then it's a good idea to go to the debtors schedule and smooth out the cash receipts accordingly.
Percentage Debtors Payments
- Current - 210 days
When completing the receipt assumptions, it is necessary to enter the terms based on past experience or future estimates. E.g., in your industry based on your past debtors performance, 30% of your sales are on a cash basis, it would then be necessary to enter 30% in the current area. If 50% of your debtors pay on a 30-day basis then enter 50% in the 30-day field. After entering the % you require and the calculation of debtors receipts does not give you the desired effect in any particular month, you may enter an adjustment which may be a negative or positive figure in the adjustment column. The total Percentage Payment column must add up to 100% otherwise the total will show and Error.
If you are setting up a Cash Flow for a cash business enter 100 into the current % area.
Bad debts %
The system calculates bad debts by multiplying the total Turnover including VAT for all products by the Bad debt % and inserts the result automatically in the Income Statement. Debtors are reduced by the bad debt percentage. The bad debts calculated take into account vat and updates the appropriate schedules.
