Is Your Business Set Up to Sink or Swim?

While intuition can be helpful in business, it’s not always reliable and can lead to missed opportunities or poor decisions. To make the best business decisions, it’s essential to strike a balance between intuition and data, and to know when to use each one effectively (and when not to). 

One of the most critical aspects of running a business is cash flow management, which is certainly not an area where gut instincts should be relied upon. Performing a cash flow forecast is a vital step in ensuring your business is set up for success. You could say it’s the deciding factor on whether a business, when faced with challenges, can turn them into opportunities, i.e. will they sink or swim?

Through cash flow forecasting, business owners can take a data-driven approach to decision-making. Analysing past and current financial data allows them to make more informed decisions into the future about managing expenses, investing in growth opportunities, and even hiring new employees.

Implementing a cash flow forecast also allows you to predict cash shortages or surpluses in advance, ensure payments are made/received in a timely manner, and it helps you to avoid future cash flow difficulties leading to times of uncertainty and unrest.

Put simply, cash flow forecasting provides you with more control – it is your business “life jacket” to keep you afloat during rough seas, and your guiding star to help you navigate your way back to safe ground, or financial stability, where you can grow and prosper.

We’ve taken this ocean analogy one step further on our blog to make understanding cash flow forecasting simple (Read article).

Strategies for Efficient Cash Flow Management

Whether you’re a small business owner, or you manage a much larger company, we believe that every business owner should prioritise managing their cash flow. It guarantees that you have the necessary funds to cover suppliers, employee salaries, and other expenses, while also identifying potential issues with customer payments.

To make informed business decisions, you need to understand your cash flow. Without it, you may struggle to cover necessary expenses, miss opportunities, and damage your reputation (or worse, face bankruptcy). By closely monitoring your cash flow, you can address any problems that arise proactively. This includes late customer payments or unexpected expenses. This can help you make strategic decisions that will benefit your business in the long run.

If you’re not sure where to start, engaging an experienced accountant can be a game-changer for your cash flow management. Your accountant can analyse your cash flow and identify areas where you can reduce expenses. They can also ensure that you’re meeting all tax obligations and operating in a tax-efficient manner.

Some cash flow management strategies we can assist you with include:

• Cash Flow Forecasts and Adjusted Cash Flow Forecasts
• Three-Way Cash Flow Forecasts (Profit, Balance Sheet, Cash Flow)
• Implementing adjustments to regulate cash flow
• Setting financial targets
• Forecasting profit levels and cash flow requirements for management
• Generating P&L and Balance Sheet Reports
• Creating Cash Flow Statement Reports
• Building a customised Business Intelligence Dashboard for your business

These strategies form part of our Cash Flow Forecasting Program, Swell.

Maximise Your Business Insights with ‘Three-Way Forecasting’

By integrating your profit, balance sheet, and cash flow data we can create a tailored “three-way forecast” for your business. This will provide you with a comprehensive overview of your assets and expenditures, which may not be reflected in your cash flow analysis but are visible elsewhere. With this information, you’ll be better prepared to make informed decisions about your business’s future.

The Impact of Cash Flow Forecasting on Business Strategy

Forecasting plays a significant role in business strategy by providing business owners with the information they need to make informed choices, helping them to prepare for the future, identifying areas for improvement, and enabling cash flow projections for growth. By utilising forecasting, businesses can enhance their profitability and minimise risks.

Introducing Swell: Our Cash Flow Forecasting Program

Managing financial data can be challenging without a solid understanding of finance. While there are many tools available, setting them up can be difficult, and you may not get the results you were expecting.

We want to make cash flow management easy and assessible for everyone, which is why we developed our own Cash Flow Forecasting Program, “Swell”. Swell addresses this issue by pairing software with expert human consultancy. We take the time to understand your business and provide you with a Business Intelligence Dashboard tailored to your requirements. We also offer training, monthly consultant insights, and suggested actions to help you take your business to the next level.

Swell provides real-time data in a visual format, allowing you to better comprehend what lies ahead and plan accordingly. We assist you in developing a business strategy to streamline decision-making and enable informed choices.

Not sure if Swell is right for you? You may benefit from our blog article – Why Your Small Business Should Use Swell: A Cash Flow Forecasting Tool