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Posts Tagged ‘cash flow’

The income side of the Cash Flow Worksheet is broken into six categories: earned, self-employment, family, government, retirement, and investment income. The following is a brief guide to what kinds of income fall into each category. (For each of the six categories, we have provided a line on the worksheet to subtotal the income, which will make it easier to add up your total income at the end of the worksheet.)

Earned income. The most common and largest source of income for most people, of course, is their salary from a job. You should note on the worksheet your net take-home pay, after deductions. Other sources of earned income include commissions paid to salespeople, bonuses for extraordinary performance, overtime, and tips. You may also be entitled to stock options, which give you the right to buy your company’s stock at a preset price, usually below the current market value, and the right to sell the shares for a profit. There are also many forms of deferred compensation that can be paid out to you, based on your performance or in accordance with the provisions of a contract. If you expect to exercise stock options or receive deferred compensation in the next year, you should note this on the worksheet.

Cash flow is the transfer of money into and out of a company. As indicated previously, the developer needs to know what financial demands are going to be made during all stages of the development. Equally, contractors need to know about their predicted cash flow to be able to cover any deficit in funding. Remember the contractor aims to cut this to a minimum as the margins on a contract are small and any interest paid on money borrowed  will eat into this.

In practice, on a traditional contract using the bills of quantities the timescale is as follows. To save time the contractor’s quantity surveyor will produce an interim valuation of the work that has been carried out by the contractor during the month. A meeting then takes place with the client’s quantity surveyor (PQS) on site at the start of the following month and this valuation will be agreed. It normally takes one week for the PQS to submit this valuation to the architect.

Usually the architect takes two weeks before issuing a certificate, and depending on the clause in the contract the employer is obliged to pay the contractor the agreed amount within 14 days. This can sometimes be 28 days. Generally, from completing the month’s work the contractor is paid within four to five weeks.