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Cash flow forecast: Do you want more cash in the bank in 2015?[/caption] As we’re speeding towards the festive days, you’re probably frantically trying to close your books in-between eating mince pies and doing your Christmas shopping. You’re probably also hoping for a bit of time to plan the year ahead. One of the things you may be pondering under the mistletoe – is your cash flow forecast and how to ensure your business has enough money coming in to cover what you have to pay out over the next 12 months. Getting the balance right is crucial – because businesses often go bust not because they don’t have enough profits or orders coming in, but because of a lack of cash. An accurate cash flow forecast can protect your business against this situation.
Have a plan: You have to be organised and create cash flow and profit forecasts and the cash flow forecast is the more important of the two! A cash flow projection will chart the amount of money your business expects to get in and spend each month over a 12-month period. At the very least it will make you ask the right questions and think about your costs and pricing in the year ahead. Set cash targets: Once you have a plan in place, you should set weekly cash flow targets – to ensure you’re always on top of the cash flowing in and out of your business and stay in control. Be honest: By forecasting and asking the right questions, you might uncover problems in your business that are hard to face – for example your pricing may be unrealistic or you may be targeting the wrong audience. Don’t stick your head in the sand – face up to the problems and do something about it before it’s too late. Ensure prompt payment: Don’t be tempted to relax payment terms for the promise of a lucrative contract – insist on prompt payment and don’t accept back-to-back payment terms – where you only get paid when the customer gets paid. Invoice promptly: Invoice as soon as work is completed to ensure you don’t waste any unnecessary time getting paid. Make payment easy: Try to avoid cheque payments as this results in delays before the money arrives in your account. Online payments are much easier and faster. Offer retainer packages: By offering a fixed rate package periodically, you’ll have a better idea of how much money is coming in every month. Use technology to manage cash flow: Cloud-based financial planning applications such as Financial Driver can save you lots of time, allowing you more time to focus on your business. It automates the collation of budgets and forecasts from different departments, which are then consolidated to provide a range of management reports. Financial Driver will process the information - and produce different cash flow scenarios for your business – without you having to spend hours slaving over spreadsheets. It will give you all the tools you need to take your business to the next level without worrying that you don’t have enough money in the bank. It’s easy to set up, no training required and very affordable. Find out more here. To find out more about Financial Driver and how our Cloud-based financial planning application can help you ensure you have more cash in the bank next Christmas, CONTACT US today to book a free demo or find out more.
Photo credit: Free Digital Photos.Net