Cash is King! An insight into Cashflow, Forecasting and Budgeting

Cash is King! That’s true, right?  But in the current world cash is a huge worry – increasing interest rates coupled with ever increasing fuel prices means the impact is being felt by everyone.  So, what can you do to ease the worry, make things less stressful and (hopefully) sleep better at night? 

Well, we can help!  We know it can be a bit overwhelming knowing where to start, especially if accounts aren’t your ‘thing’. 

So, firstly – a Cashflow.  This can be as simple or as complicated as you need, for as long or as short a period.  The main thing is to include everything you know about so you have a clear view of your cash position and can identify shortfalls in advance.  Forewarned is forearmed and the quicker you identify any troughs, the quicker you can even out the peaks.

Secondly, a Forecast.  This is different to the Cashflow as Forecasts focus on the trading ins and outs.  A Forecast can help you plan ahead on a rolling basis, with flexibility to change as circumstances develop.  An example could be advertising/social media spend scheduled when you need it most – sales in March 2022 looking a little down?  Invest in some extra spend before then to boost the potential sales revenue.  A Forecast is a working document which helps businesses focus and can help with short to medium term strategy planning.

Lastly, a Budget.  This is never a favourite as we find business sometimes don’t know where to start in building an annual Budget.  It is, however, an extremely useful tool to get businesses focusing on the goals they want to achieve.  Then, once it’s in place, it can be used as a tool to measure performance and identify areas of concern.

The main things for you to consider are - what level of risk are you comfortable with?  And do you have enough cash reserves to mitigate any shortfalls?  By forward planning and being on top of your finances, you have the tools at hand to empower your business to work at its best.

If you’d like to know more or have a chat about how we can help, contact us and we’ll be happy to walk you through all the stages and find the best path for your business.