Remember that not all sales patterns will be the same so it's important to think about the factors that could affect your income in a particular period. Take a look at your sales over the last two to three years and use it as a basis for your calculations. STEP 1: Estimate how much money you think you’ll earn in a specific period of time (weekly or monthly). We've broken the process down into several steps so you can easily perform your own accurate cash flow forecast. There are two important components that make a good cash flow forecast: your projected income and your estimated expenses.
CASHFLOW FORECASTING PROFESSIONAL
Working closely with a professional accountant or utilising an accounting system will generate all the important data you need but if you're just starting out or don't yet have the funds to invest in a new tool - don't worry! You can do the forecast on your own using a spreadsheet.
But after setting up your first forecast the next ones will be easy, as you'll have a template. Preparing an accurate cash flow forecast can be a bit time-consuming, especially if it’s your first time. Always remember that as a wholesale business you get most of your profits from orders, so on-time payments are important. With access to more cash, you can then decide if you can afford to hire new staff, start introducing new products, rent more space for your operations, or invest in new technology to improve your productivity.Ī cash flow forecast will also help you track how quickly your customers are paying their invoices. WHY IS A CASH FLOW FORECAST IMPORTANT?Ī cash flow forecast acts as your “warning system” - it warns you if there will be shortages so you can immediately get a backup plan ready and it lets you know if you'll be earning more money than you thought.
Usually, a forecast looks ahead 12 months, but it can also cover shorter periods like a month or a week. It also includes all your itemised projected income and expenses. Cash flow is critical to the success of any sized business, so performing a good forecast is essential.Ī cash flow forecast is an estimate of the amount of money you think you could bring into your business and how much you’re expecting to spend. Ask any successful food and beverage entrepreneur what they think is the most important inclusion in a business plan and they’ll probably say - accurate cash flow forecasting.
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