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If you have just started selling on eBay, you may be wondering how to put together a cash flow statement. Before you can do that, you need to have some idea of the net worth of your items and any cash flow you may be facing. Here is a basic introduction to putting together your Cash Flow Statement:
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Items will typically not have the cash flow for years. Most items may never have enough money coming in to cover your expenses or an item may sit on your counter for years and still never sell. Then you may sell it for some profit and keep some of the money for an inventory that’s needed to sell other items. Sometimes there are tax issues that need to be dealt with so that you don’t end up short when you pay taxes. Other times, you may want to plan for a sale that doesn’t happen – this can leave you with a lot of excess inventory and you’ll need to have a plan for how to dispose of it.
You want to document this so that you can create a cash flow statement based on what you expect to happen with your business. There is no “one size fits all” for this type of financial statement. You’ll want to make sure that you aren’t covering every expense and that you take into account things like accounts receivable. The item you sell may be sitting on your shelves for months before you start to see any sales.
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To make your cash flow statement for eBay work, you need to have an income statement and a balance sheet. Having a balance sheet will allow you to see if you are making any money, and this can then allow you to see how much of a profit you are making. This can help you determine if you are making the right decisions and if you are selling your inventory effectively.
A simple way to get your balance sheet into the template is to download the free Excel spreadsheet that comes with your operating system. If you don’t already have it, go to “file” and select “download.” Choose the file from your desktop and then open it with your spreadsheet program. This is a one time download and you can always download the rest of the information you need to have into your financial report.
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When creating your cash flow statement, you’ll want to record the gross profit, sales volume, average selling price, amount of money left to sell and a profit or loss figure for your expenses. You’ll also want to include expenses such as inventory, shipping, taxes, and profits from selling related items. A spreadsheet can also help you add notes like “this item sold at auction” if you sell the product through a third party.
There are online templates that you can use to create your own. You can either download them and use them or you can create your own by downloading an Excel spreadsheet or template.
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