Many SME’s operate without any forecasting to determine their financial objectives for the year ahead. Forecasts should be prepared because they allow you to monitor your progress during the year against pre-determined goals and it allows you to determine in advance any cash flow or financing requirement for the business.
Banks also often require forecasts of their customers, whether it is for renewal of banking facilities, or to fund a particular expansion or investment. Forecasts should always be an integrated profit and loss, cash flow and balance sheets, prepared on a monthly basis over at least the forthcoming year. Often the company’s bankers may also require a funds flow statement, which is a really a variation on the cash flow statement.
It is commonly said that a business can only grow as fast as its cash flow will allow. However, many businesses are so focused on growth that their cash flow fails to keep up with the costs generated by their expansion.
Our integrated three-way forecasting process – profit and loss account, cash flow and balance sheet helps you as an owner, to set the financial performance requirements for your business while ensuring you have sufficient cash flow to meet these targets. If successfully implemented this will also ultimately increase the value of your business.
A review is made of the current financial position of the business.
A financial forecast model is created to reflect your business sales structure and operations.
Strategies are agreed upon to achieve profits and source the cash flow requirements of the business.
A detailed action plan is developed for implementation of each strategy.
You will have a solid understanding of the current financial position of the business, the profit target for the year and cash flow requirements.
Any need for additional funding will be identified, when it will be needed, and where it will come from.
Improvements in cash flow opportunities are identified, discussed and implemented to ensure positive cash flows from internal sources.
Demonstrate to your bankers that you are in control of your business and taking proactive action to source any additional funding in the year ahead rather than reactive requests at short notice.