Visual Cash Focus - User Tip 39

Transcription

1 Visual Cash Focus - User Tip 39 Capital Expenditure, Deferred Payment and Financing options How to input a CAPEX budget and options for deferring and financing payments The Scenario Let s assume that you have created a number of Fixed Asset accounts entered the Opening Balances and now need to add planned Capital Expenditure. What are the options for entering CAPEX and customising the respective cash flow payments? Suggested Solution How to key or import CAPEX Budget or Forecast data 1. Keying a CAPEX Budget or Forecast To manually enter CAPEX data Go to Accounts & Budgets Select your Fixed Asset category Choose the Budget Setup tab and confirm the preferred depreciation method (i.e. Amount or depreciation %) Choose the Budget per Period tab and enter the annual rate or amount divided by 12 for monthly depreciation. Note that there are 3 columns Col 1 (Depn Percent) is either the annual Depreciation % (divided by 12) or the monthly depreciation amount. Choose the depreciation amount if importing the budget. Col 2 (Addition + or -) is for the CAPEX Budget Enter the budget CAPEX data in column 2. Positive amounts are treated as asset purchases, negative amounts are disposals. Both are Investing Activities for Cash Flow purposes.

2 Note the right click options for allocating annual budgets and copying. Col 3 (Gain/Loss) is for entering gains or losses on assets sales. 2. Importing the CAPEX Data Fixed Asset additions can be imported. This option would be used if there was a large list of assets purchases to be updated. To import a CAPEX budget click the top left menu options as follows Select File, Export/Import, and Universal Import from Spreadsheets then Choose Budgets File Type - select Excel 97 or Excel Worksheet File Name - choose Find the File and then navigate to the budget data file Click Do The Import. The software will then report the lines that were successfully imported and those not. Click Import Review to view the results and note any rejected accounts. Note if some lines import okay and others do not this indicates that either the rejected account either a. Does not exist in the model, or b. The account is incorrectly coded If no lines are imported, a. Check that the spreadsheet is closed (not open) b. That the spreadsheet has the correct import format. Budget and Forecast file import format To import Budget and Forecast data from say Excel the spreadsheet should be formatted as follows.

3 Col A = the account code Col B = the period reference is the Budget or Forecast period number Col C = the depreciation % or amount Col D = the CAPEX amount excluding GST Col E = Gains or losses Note that the Col descriptions and account references are optional The following is an example of the format required to import all 15 periods simultaneously for Motor Vehicles. This format can be achieved using Lookups and macros. The format is the same for importing single or multiple periods. Note that VCF will generate the file format for you. To generate this report I created a Motor Vehicle account and entered a purchase of $40,000 into period 3. The budget file was then exported to Excel. Other budget items were deleted. As with importing budget data (see tip 6) it is easier to format the data as follows with the periods going across the page.

4 Rather than reformat the spreadsheet to import all periods simultaneously, each period can be imported one period at a time. Although 12 separate imports are required this may be an easier process than reformatting it. In the above example only period 1 will be imported and the remaining periods will be ignored. To import the next period 2 data, the highlighted period 1 column is deleted, and the Col B reference is changed from a 1 to a 2. This tells VCF to import the data into period 2. To import period 3, the second period s data column is deleted and the Col 2 period reference is changed to a 3 etc. 3. Use Excel Links Excel Links enable complex CAPEX budgets to be calculated within a spreadsheet with only the Asset category totals being imported. To use the link click TO Excel and link the schedule to the CAPEX total for each period. 4. User journals The advantage of user journals is that you can accrue the planned expenditure to Accounts Payable as shown then pay the amount over multiple periods as required. The following illustrates the payment made the period following.

5 Suggested Solution How defer the CAPEX payment? The system default is to pay the CAPEX amount in the same period as the budget data. There are three payment options 1. User journals as above 2. Use special timings The advantage of special timings is that they are quick to implement but the disadvantage is that the payment cannot be split over multiple periods.

6 To create a special timing use To column and simply specify how many periods in advance (-) or arrears from the budget amount the cash flow is to occur. For example, by specifying a 2 alongside the budget entered in period 3, the cash flow payment is deferred by 2 periods to period 5 as shown below. The 2 represents payment two periods following or 60 days payment terms. Note that the Asset purchase entries are Dr Asset, Cr Bank. Suggested Solution How Finance CAPEX purchases The system default is to pay the CAPEX amount from the default Bank Account. Depending on the amount, the purchase my need to be financed. There are two Financing options a. Normal Method - Enter the Asset purchase into the additions column then go to Long Term Loans and create a Loan Schedule for the repayments.

7 Use this option to show the Asset purchase as an Investing activity and the loan repayments as a Financing activity. b. Alternative method - Instead of entering the Fixed Asset addition click the loan schedule option as shown. Use this option to show the purchase and loan amount offset together. Note that this is a short cut option that shows the asset purchase and loan advance together as a Financing Activity. Enter the loan payment details as follows Exit and click Results View to confirm the Cash Flow results

8 See above the Motor Vehicle payment made of $40,000 plus GST offset by the loan received of $45,000. Note that both options should be cash neutral. If the Asset is to be purchased over a number of periods, e.g. a deposit, a progress and then a final payment, consider entering the fixed asset additions to match the completion points and entering amounts into the Loan schedule additions column to match the cash flow requirements.