Projecting and predicting a business future cashflow, either short or long term, is vital to help a business stay healthy and grow. Forecasting can help you plan for future costs or quiet periods to avoid your business being cash strapped and avoid any additional stress or worry.
Detailed cashflow projections, especially as you become more comfortable producing and reading them, can also help your scenario-plan and find areas for cost-saving strategies.
Keys Ways Cashflows Can Help
We have shown below some of the keyways that we think you can get more from your forecasting.
1. Run regular forecasts, both short and long term. The financial situation of any business or industry can change overnight, with some industries being more prone to large fluctuations that others, it is vital to know your current position to help you react in the best possible way. How frequently you run these forecasts will depend on your business, your industry and your current cashflow requirements.
2. By using the latest cashflow software, such as Futrli, that integrates with your bookkeeping software it allows you to drill further into the figures and start to generate initial cashflows with ease. However, we do need to point out that any cashflow software does take time and some care to make the most out of it and to produce more accurate predictions.
3. Cashflow predictions can not only assist in managing future costs, but they can also highlight new areas of revenue. This could be offering new products that compliment your current products or services, working with a new partner or business or improving on the current services you are providing. The additional revenue streams can help offset future costs and your business could become less reliant a single revenue stream.
4. Become proactive with cost-cutting, this doesn’t mean to start reducing budgets or staff numbers but instead using your current resources more efficiently. Cashflows can help you identify areas of your business where there is waste or areas that can become more efficient that might not be evident on a day-to-day basis or in a yearly set of accounts.
5. You can run various scenarios to see the effect on your business. You could have a large variety of ideals you might what to implement for your business, by using scenario planning you can try to predict the possible financial implications of these changes before you commit. It’s always best to have the most amount of information available before you make any big decisions.
Advice
If you’d like to know how using cashflow prediction could benefit your business, or get started in using them, please get in touch with us.
