Cashflow forecast – Do I really need to do it?

by | Mar 25, 2021 | Cashflow

 

Cashflow forecast –

Do I really need to do it?

  • You earn money in your business and never see them in your bank account?
  • Clients pay you and your cash disappears immediately from your bank account because you need to pay your bills, employees, insurance, vehicle leases…?
  • Does your bank account always show a negative balance?
  • Do you always get the promise from your bookkeeper that they will do the cashflow forecast but it never happens?

 

 

Here are 5 reasons why you have cashflow problems in your business:

  1. YOUR CLIENTS DON`T PAY YOU ON TIME
  • Let`s face it! No one likes asking for money. Whether it`s a friend you are doing a job for or a client, asking for money is not fun. Or, you might ask for money but when the invoice is overdue. Well, then it is too late because your terms were 30 days.So, ask for your money before the due date.
  1. YOU ARE PAYING YOUR SUPPLIERS TOO QUICKLY

     Pay your suppliers` invoices when they are due, on the day! Not a day earlier, not a day later. You need to keep your money in your business.  Avoid paying COD or if that is the case, ask your suppliers when you can open an account with them.Avoid paying you bills late as this can lead to payment penalties (late payment fees)

  1. YOU ARE PROVIDING DISCOUNTS TO IMPROVE YOUR SALES
  • Whilst offering discounts can boost sales, you need to ensure your profit margins don`t take too much of a hit. Even a small discount can have a big impact on your cashflow.So before offering a discount, ensure you have included in your quote all your expenses including overheads,materials,taxes…
  1. INADEQUATE FINANCIAL RECORDS

Is your bookkeeping up to scratch? For efficient cashflow management, you need to know how much you need to sell next month to keep your business doors open. Cashflow forecasting is very important for every business because it tells you what is your cash inflow and what is your cash outflow. There are softwares/applications that can automate your cashflow forecasting so if you are not doing it, start with your cashflow forecasting today.

  1. NO ACCESS TO FINANCE
  • If you`re already in a hard cashflow situation and if you`re looking for finance, then it`s probably too late to ask for finance. You should always have short term financing facility in place before you need it.
  • SO WHAT IS THE RED FLAG YOU HAVE IN YOUR BUSINESS?