‘Cash Flow is Your Bible’ - Caprice Bourret, Lingerie Tycoon

Now that you have your business vision written down, what next?

By Your Financial Ally @ Business Bright

In the Preface to the book Future Ready, the authors say:

"The biggest value in effective forecasting lies in its contribution to steering the business; to the day-to-day decision-making that lies at the very heart of business. Decision-making is driven by information - without it management is no more than guesswork..."

Do you know what your bank balance will be in three weeks or three months?

A Cash Flow Forecast for small business lets you know when money is due in and out and so can help you avoid a financial crisis that could lead to your business folding

In my opinion, even better than a 12-month cash flow forecast is a 13 Week Cash Flow Forecast (TWCF). I have been using one in my business for the past few months and I am finding it invaluable for keeping me at a known financial position.

It takes just 30 minutes per week to update, first thing on Monday morning is ideal. Nothing focuses your mind on the money side of your business better than a TWCF

Why 13 weeks? Because, it’s short enough to keep your predictions fairly accurate and long enough to include sales tax/VAT payments and payroll tax payments, if applicable. Plus, it’s not too much information on one sheet, so easier to get those brain cells around.

With a 13 Week Cash Flow Forecast You review your business bank balance every week and project into the next quarter on a rolling basis

If it shows a future shortfall, you can ask why and act now to turn that around

  • Do you need to invoice clients now?

  • Do you need to chase late payers?

  • Do you have too much invested in stock/inventory?

  • The TWCF will highlight the need to brainstorm new sales opportunities

  • Do you need to analyse your expenditure to see if any items are no longer needed? For example, when did you even look at that trade magazine that you subscribe to every month?

Take time to monitor your TWCF to get real value from it:

Real Life Example from Strategic CFO: An owner of a retail boutique commissions her accountant to set up a Thirteen Week Cash Flow. ‘Then after finishing, he takes some time to look at the report. At the end of the 13-week period, he discovers that the company cannot complete payment of all accounts payable (bills). This worries the accountant. So, he takes a few more moments to create a potential plan of action. He then resolves that if the store owner, a woman with impeccable credit, opens an additional business credit card she will be able to meet her cash needs. As a result of the increased sales volume due to opening of the spring season, the owner will be able to pay back the credit card balance before having to make a payment.

What could have been a major catastrophe is now a simple matter. In conclusion, the owner of the boutique thanks her accountant…..and decides to always have a Thirteen Week Cash Flow Report on hand.

  • If your TWCF anticipates surpluses, can you finally afford to invest in new equipment or additional staff, or a much-needed holiday?- Nice!

    A 13 Week Cash Flow Forecast, keeps your eyes wide open and your finger on the pulse

It not only helps with decision making but also scenario planning. ‘What if’ questions are used to explore the impact of different decisions on your business’ cash flow

What could be more important than ensuring that your business has sufficient cash in the coming weeks and months

Come on, get your head out of the financial mire and request your FREE 13 Week Cash Flow Template ally@businessbright.co.uk

You can customise the template for your business.

Business Bright Ltd, Enterprise House, Navigation Park, Abercynon, Wales, CF45 4SN, United Kingdom