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What is your cash balance right now? Are you able to reply off the top of your head?

Even the most intelligent and experienced person would fail if they were making business decisions using inaccurate or incomplete cashflow data.

That’s the reason why business failures are not limited to amateurs or people new to the business world.

Your business bank balance and your cash balance are two different animals. Rarely will the two ever be the same. Don’t make the mistake of confusing them. You reconcile your bank balance. You don’t manage from it.

When it comes to properly managing the cash flow of your business, the best way to move from where you are now to where you want to be is to get a clear picture in your mind of the benefits you will enjoy as you take control of your cash flow.

The benefits include:

  • Increasing the likelihood that your business never runs out of cash
  • Eliminating the constant worry associated with not knowing what your cash balance is right now or what you expect it to be
  • Improved relationships with your vendors because they are no longer banging on your door demanding that their past dues invoices be paid
  • The ability to see possible cash flow problems long before they can happen

In short, you free yourself to focus your unique talents and abilities on growing your business rather than fighting constant cash flow fires.

Financial forecasting allows you to plan ahead.  Additionally, it will be required if you need to apply for loans or other inputs of capital from third parties.

If you are wanting to track your cashflow, you might build a forecast yourself using an excel spreadsheet, for example, but it could be time consuming, complicated and probably not accurate when applied with your Balance Sheet and Cash Flow Statement.

Many of our clients came to us after having their forecasts refused by the bank. It represent a loss of time and money for the business and a risk of running out of cash during the bank’s preliminary review.

As part of our consulting services, we prepare 3-way forecasts. The forecasts – Profit and Loss, Balance Sheet, Cash Flow – and their comparison with actuals (monthly when we meet) will provide you with a good understanding of where the money flows and how we can optimise the performance of the business (what-if analysis).

These forecasts are more commonly accepted by the banks and it will enable us to help you to identify key areas and growth opportunities in your business.