Preparing a Cashflow Forecast
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Preparing a Cashflow Forecast
We have teamed up with an established Consultancy Practice to offer your company a full Cash flow Service. The most important factor in an organisations is cash. It is vital that control over a companies working capital is maintained. Depending on the size of the company this can be a simple cash flow forecast each month or for the larger companies a treasury department. Our business partners are experts in this field and will direct your company on the way a cost effective cash flow monitoring system works. This will look at the working capital cycle i.e. debtor days, creditor days, stock management and finding the best possible place to keep surplus cash. A cash flow projects your business cash inflows and outflows over a period of time, this is usually a week or a month, this is to predict shortfalls in funding during the period. Thus allowing you to take steps to find appropriate funding for that gap. The cash flow will have the following a sales forecast, projecting your anticipated cash inflows, a purchase forecast projecting your anticipated cash outflows. This will identify surpluses and the opportunity to place short-term money on deposit to earn interest. or if there is a shortfall then identifying deficits and the need to accelerate cash flows or borrow short-term money, Forecasting is not an exact science and thus will be your best estimate based on information you have at your disposal. Any forecast will include some uncertainty and will be subject to many variables: the economy, competitive influences, demand, etc. Where cash flow is not monitored well , it can lead to overtrading whereby your company is doing well in profit terms, but your cash inflow lags behind your payment cycle, creating the situation where you can not pay your debts when they are due .
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