Cashflow Forecast

Predicting your future… with financial forecasting

With the pandemic still very much on the mind of business owner there has never being an more important time to look at cash-flow forecasting to ensure that your business has the cash to pay suppliers, wages.

An all too common story

Have you ever experienced that moment when you realise there isn’t enough cash to meet the wages bill at the end of the month?

Have you ever had that unexpected phone call from your bank manager to say you’ve exceeded your borrowing limits?

Have you ever looked at your year-end financial statements and been surprised; the profit for the year was nothing like you expected?

Those unexpected moments can have dire consequences on cash flow and the viability of the business.  Very often this can arise despite sales growth going as planned.  For example, doubling sales over a 12-month period where accounts receivable terms are more relaxed than when a business pays its suppliers can lead to major cash shortages; and sometimes going out of business.

If only you had a crystal ball to look into the future, you could take corrective action to avoid those problems.  That’s what a comprehensive financial forecast will do for your business.  In fact it will do much more…

Getting the focus back

You have goals, targets and plans for your business.  But have you broken that down to a monthly plan and forecast?  Do you know the impact your sales targets will have on your cash position?  Do you know what additional resources you will need to support your sales plans?  How will that impact on cash?  Will you need additional finance?

It’s tough sometimes to figure out why the profits are not what you expected them to be, or why some costs are so much higher than you thought they would be.

So, what we do is prepare a business forecast that projects ahead across future periods so you have your goals clearly in mind every day and measure progress along the way.

This is how you benefit from financial forecasting

  • You will identify the financial viability of your future plans, including the launch of a new product or venture.
  • You will identify periods where you may experience cash shortages allowing you to take corrective action.
  • You can look at different scenarios and see the impact on cash.  For example, the impact on your cash position if sales outperform expectations.
  • You can carry out breakeven analysis to identify the minimum level of sales you need to make each month to survive.
  • A financial forecast can be updated regularly to reflect changing circumstances and help keep you on track to achieve your goals, targets and plans.
  • Improved cost control because you will always know what you should be spending.
  • By comparing actual results against forecast and analysing the reason behind variances helps you to understand better what is happening in the business.
  • If you are looking to secure funding for your business, up to date financial forecasts will help you get the money you need (in fact, often it is a condition of the lender).

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