how to keep on top of your businesses cash flow
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How to keep on top of your businesses cash flow

Cash is crucial to any business. You need money to be coming in to exist as a business, keep running and be profitable. You need cash to pay for services, expenses, payments and more. Cash is the bloodline of the business and if the cash stops then your business is ultimately going to stop. Therefore, anything which can help your cash should be a priority for your business. Cash flow is key!

What is cash flow forecasting?

A cash flow forecast is a plan that shows how much money a business expects to receive in, and pay out, over time. It’s part fact and part prediction. You can input costs which you know will be coming in and out every month and then predict new work, expenses and payments. You can also try out different cash scenarios in a forecast to see best and worst case scenarios.

Advantages of cash flow forecasting

Able to make sure the business can afford to pay suppliers and employees
Suppliers who don’t get paid will soon stop supplying the business. Even worse if employees don’t get paid on time, they may just walk. Therefore, it is crucial to know whether these particular payments can be met each month.

Identify potential problems in advance
Think of the cash flow forecast as an early warning system. Cash flow forecasting will highlight any unforeseen problems, giving you the time and information you need to steer your business clear of any problems.

A way of budgeting and keeping you on track
By inputting costs you know you have to pay every month, you will be able to see how much money you have to play around with ensuring that you shouldn’t go over budget. It gives you the knowledge to make better informed decisions for your business.

Easy to see potential options
Cash flow forecasting means you can visualise any and all of the scenarios you can think of for your business. It can give you the information you need to help you make those big decisions, taking on more staff, changing your prices, moving premises or changing suppliers. Cash flow forecasting is a vital part of your decision making process.

Allows time to focus on other tasks
By having a software such as QuickBooks makes cash flow forecasting quick and easy to use. You are able to update figures quickly and pull up the figures in a report format within seconds allowing you time to focus on other important tasks.

Forecasting a lot cheaper than failing
At the end of the day, we all hope each year will be more profitable than the previous, so avoid potential failure with regular cash flow forecasting, make provisions and decisions to improve your cash flow.
5 tips for successful cash flow forecasting

Schedule time to input and change data within your cash flow forecast
By keeping the cash flow up to date it will make it easier to use when you need it.

Input data already on your software
QuickBooks will input your actual figures which you have already put on the software meaning you only need to focus on the future.

Only forecast up to a year head
Your cash forecast needs to be realistic to function properly and as a business you normally know roughly what money may be coming in an out for the year ahead to be able to predict fairly true results. Predicting further ahead is probably going to be guest work, leaving you with unrealistic data.

Make sure you include everything in your forecast
Include every fixed, variable and semi-variable cost that you can into your forecast to try and make it as realistic as possible.

Keep the sections simple
Make sure to name the different aspects simply to ensure that not just you can understand it but when someone else wants to cast an eye over the forecast, they too can make sense of it.

How Footprints can help you

Our aim as Footprints Accountancy, is to work with you throughout the year to support you and your business to grow and become more profitable. We will help you understand the numbers, what needs to be done, when and why and assist you within your business.

Whilst we will work on all accountancy software packages predominantly we are an Intuit QuickBooks practice. QuickBooks allows you to easily create, update and have access to a cash flow forecasting tool. We will be able to work with you, to create, guide and support you with your cash flow forecast. Making sure you get the most out of it, understand the figures and apply it within your business.

We believe that QuickBooks Online is the way to go for your business. The reason why we are advocates is that it caters to everyone, it is an easy and friendly software to use. Further to this it will save you time. As the name suggests it’s quick. It will start to remember previous transactions making cash flow forecasting quicker and easier for you.

You and ourselves can sign in anywhere, either on a desktop, laptop, tablet or mobile. This means we can log on at any time and help you out. And the best bit, you are in good hands. Julie & Rob are two of only nine trainers in the UK who train other accountants nationally on behalf of QuickBooks.

If you are wanting to make cash flow forecasting part of your business then please contact us at [email protected] or call us on 0114 248 8764.

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julie robinson footprint accountancy
Julie Robinson - Managing Director
Julie set up Footprints Accountancy in 2010 after gaining over 20 years experience in a variety of financial roles in both the business and voluntary sectors.
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