Cash flow forecasting for your business
The pandemic has taken us all by surprise. As the crisis escalates once again, business owners need to rethink their plans to take account that we are in this for a longer term than initially anticipated.
The government-backed financial support to keep businesses afloat has been generous. However, many businesses that have benefitted from this extra money may still find they are unable to operate normally due to the ongoing impact of the pandemic.
If you are a business owner in this situation with no prospect of your cash flow improving any time soon, allowing for outstanding payments such as deferred VAT and, Corporation Tax may be difficult. And, if you employ staff, and your business is required to close or is facing decreased demand you will still need make a contribution to their wages.
Cash flow is the lifeblood of every business. It is especially important at times like this. Keeping a check on your bank account with a good cash management system will help you foresee any potential problems and gaps in the availability of cash.
As accountants, one of the first things we did at the start of the March lockdown was to provide our clients with a cash flow template and urged them to prepare their forecasts as soon as possible. Using this as a tool to gauge whether they would need additional funding. Then to regularly maintain and review their forecasts so that they always had visibility of their cash requirements.
If you use an accounting software package in your business these often have built-in budgeting options which allow you to build and track you cash flow projections and see your financial information. Now might not be the best time to invest in new technology but it is still worth considering the forecasting benefits it could provide for the future.
It is not easy to plan ahead but keeping your accounting records up to date is essential. Having timely and accurate financial data can help you keep a check on your cash flow and redirect money where it needs to go. You can then use ‘what if’ scenarios to forecast how resilient your business will be in the difficult months ahead.
Do you let us know if you would like help with your cash flow forecasting. We can assist by:
- Creating a financial forecast for your business
- Reviewing your existing forecast, advising on your projections and identifying any areas that need attention
- Helping you to make the right decisions, for example should you refinance your business assets
- Identifying tax incentives and reliefs available to your business
- Setting you up with online accounting, provide training and support
You can read more about why cash flow forecasting is such a good idea, especially at this particular time, in our special report here
Call us today on 023 2948 4356 or email mc@morriscrocker.co.uk to find out more.