💵 Lesson 13 · Cash out: payroll, vendors, and the payment lags

📌 Stage 4 · Cash Timing · Cash Flow · payment lags · 40–50 min

When each cost actually leaves the bank

Learning goals

• Apply the direct method on the outbound side with three timing rules
• Time employer payroll taxes one month behind the payroll
• Split vendor invoices 70 / 30 across two months with a January reach-back
• Read CapEx and loan payments as date-windowed sums

Concepts

Three timing rules

Cash out follows the same discipline as cash in: each line states when money leaves, not when the cost was incurred. Payroll and rent are paid in the month incurred. Employer payroll taxes are remitted the month after the payroll. Vendor invoices run 70% paid in the month incurred, 30% the next month — and January's 30% reaches back into December 2025.

Rows 10 to 17 of the Cash Flow sheet carry these rules; row 18 totals them and row 19 nets cash in against cash out.

Payroll taxes lag by one month

The studio accrues employer taxes with each payroll but remits them the following month:

=Assumptions!$C$11

Cash Flow C12 (January remittance): $2,403.50 — the employer taxes accrued on December 2025 payroll and typed on Assumptions. From February onward the row links to the prior month's P&L tax line, for example D12 = 'Monthly P&L'!D15 = $2,403.50.

Vendor invoices: 70 now, 30 next

Freelancers, marketing, insurance, and travel arrive on vendor invoices with mixed terms, so the plan assumes most are paid in-month and the rest next month:

=Assumptions!$F$22*'Operating Expenses'!C15+(1-Assumptions!$F$22)*Assumptions!$C$10

Cash Flow C15 (January): 70% × January's $11,675.00 of vendor invoices incurred + 30% × the $9,750.00 still owed from December 2025 = $8,172.50 + $2,925.00 = $11,097.50. February onward reads both months from the memo row: D15 = 70% × $12,150.00 + 30% × $11,675.00 = $12,007.50.

CapEx and loan payments by date window

Capital purchases and loan payments come from the CapEx & Loan sheet, matched to the month by date windows rather than typed schedules:

=SUMIFS('CapEx & Loan'!$G$5:$G$8,'CapEx & Loan'!$C$5:$C$8,">="&C$4,'CapEx & Loan'!$C$5:$C$8,"<="&EOMONTH(C$4,0))

Cash Flow C16 (capital purchases paid): sum the 2026 outlays whose in-service date falls within January — the $8,400.00 of workstations. February captures the $21,600.00 build-out; September the $6,300.00 of cameras.

=SUMIFS('CapEx & Loan'!$D$17:$D$52,'CapEx & Loan'!$C$17:$C$52,">="&C$4,'CapEx & Loan'!$C$17:$C$52,"<="&EOMONTH(C$4,0))

Cash Flow C17 (loan payments): zero in January and February, then the $559.91 level payment from March (first due Mar 2, 2026) through December. The FY total is $5,599.10 — ten payments.

Total cash paid

Row 18 sums the eight payment lines: salaries, health, taxes, rent, software, vendors, capital purchases, and loan payments. January totals $54,741.00 and the FY total is $664,691.10 — of which only $363,740.00 is the P&L's operating costs; the rest is timing, financing, and capital.

Practice

Fixed case: Harbor Creative Studio LLC, a four-person design studio in Austin, Texas, planning calendar year 2026. Cached numbers are the Base scenario. Pale-green cells are formulas; white cells are typed inputs. The exercise opens on the sheet this lesson teaches. Cell C15 (January vendor payments) is blank: retype the 70 / 30 split with the December reach-back.

1. Open Cash Flow and find CASH PAID — The exercise opens on Cash Flow. Rows 10 to 18 are the payment lines and their total; row 19 nets against cash received.
2. Retype the January vendor formula in C15 — Cell C15 is empty. Type =Assumptions!$F$22*'Operating Expenses'!C15+(1-Assumptions!$F$22)*Assumptions!$C$10 and confirm: it should return $11,097.50 = 70% × $11,675.00 + 30% × $9,750.00.
3. Check the other lags — C12 (payroll taxes remitted) should read $2,403.50 — December's accrual. D12 should also read $2,403.50, the same month's P&L cost. C16 (capital purchases) reads $8,400.00 and D16 reads $21,600.00.
4. Check the loan line — C17 and D17 read $0.00; E17 reads $559.91 from the first March 2, 2026 payment. O17 totals $5,599.10 for ten payments.
5. Read the totals — C18 (January cash paid) should read $54,741.00, and O18 (FY total) $664,691.10. C19 (January net cash flow) reads $2,384.00 = $57,125.00 in − $54,741.00 out.

Online exercise

The spreadsheet below is editable — follow the practice steps right on this page. Steps that need ribbon menus should be done in your own Excel with the downloadable practice file.

Checklist

Work through each item; when every box passes, this lesson is done:

• ☐ Retyped the vendor formula in C15 and it returned $11,097.50
• ☐ C12 remits $2,403.50 of December 2025 payroll taxes and O12 totals $30,742.00
• ☐ O16 capital purchases $36,300.00 and O17 loan payments $5,599.10
• ☐ O18 total cash paid reads $664,691.10; January net cash flow reads $2,384.00