Cash flow forecasting for your business
The pandemic took us all by surprise. Whilst the government-backed financial support was generous and helped keep many businesses afloat, two years on some may find they are still unable to operate normally due to the ongoing effects of the crisis on their finances and business plans.
And just as we learn to live with COVID-19, other challenges emerge such as rising inflation and global security concerns due to the situation in Ukraine.
If you are a business owner, you will know how important it is to keep track of your income and outgoings. As these difficult times continue you may face a decreased demand for your product or services or have to cope with staff absences due to sickness. Added to that you may have loans to repay and deferred payments outstanding.
Cash flow is the lifeblood of every business. It is especially important at times like this. Keeping a close eye on your bank account with a sound cash management system will help you remain in control of your financial position, 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 first 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, such as Xero, 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
Find practical tips to help you understand, manage and then improve your cashflow so you are in a better position to face the future in our cashflow management strategies guide.
Call us today on 023 2948 4356 or email mc@morriscrocker.co.uk to find out more.