Doing business in these economically trying times is a challenge. Today we point out 5 reasons for cash flow forecasts.


Cash Flow Projections is Good Business

Not only has getting funding and signing up new customers become more competitive but staying cash flow positive requires a bit more planning. Having a good idea where you are going is important. So, here are our reasons why having good cash flow projections makes for good business.


5 Reasons for Cash Flow Forecasts

1. Legal

As a director or owner of a business, or as a board member of a non-profit organisation, you have a legal responsibility to ensure you are not trading while insolvent. The only way you can be sure of this is to project your future cash flows and predict your bank balance.


2. Planning

When planning future changes to your business, you need to understand the financial impact of your planned changes. Do you have sufficient funds? Will you have them at the right time? A cash flow projection will give you the information you need to make informed decisions. Read our how to on Step by Step Cash Flow Projections.


3. Bank

When you approach your bank for a loan, provide them with a cash flow projection before they ask for it. Demonstrate (a) that you have a plan to repay the loan and (b) you are proactive and in control of your business.


4. Growth

Growing businesses are particularly prone to cash flow problems. You want to reinvest everything you earn into growing the business but it’s important to look ahead and forecast what’s needed and what is prudent to spend. Read our blog on How to Manage Your Cash Flow for Growth.


5. Manage

If your business has seasonal fluctuations it’s vital that you manage your cash flows. While your sales are varying in one cycle, the timing of your purchases is likely to vary differently. You need to purchase stock before the busy periods and often need to pay for it before it has been sold. Using cash flow projection software will allow you to plan your cash needs and avoid surprises. If you need to improve your cash flow, there are many ways to do that. Our guest article 23 Ways To Improve Cash Flow by Tracey Loubster  can get you started on better managing your cash flow.


Cashflow Forecast Software

Calxa Express is the ideal software to use for small business cash flow forecasts. Larger businesses and Not-for-Profits will probably find Calxa Premier more suitable.

If you need advice on cash flow projections we recommend you speak to your accountant or one of our Accredited Partners.