Why Cashflow Forecasting Matters

Cashflow forecasting is vital for any business. It helps you map out your financial position over the coming months and take the appropriate action to safeguard your cash position. Knowing where your cash inflows and outflows will land allows you to prepare for potential shortfalls and capitalize on surplus funds when available. This forward-looking approach is essential for managing liquidity, reducing risk, and ensuring that your business remains sustainable.

Accurate cashflow forecasting provides the data necessary to identify cash gaps early, plan for taxes, and determine when you’ll need to secure funding. Additionally, cashflow forecasting offers a clear view of upcoming costs and liabilities, enabling you to manage them more effectively and prevent sudden financial crises.

The Benefits of Cashflow Forecasting

When you have access to detailed cashflow forecasts, you can go beyond just ensuring that you have enough cash to cover your immediate needs. It enables scenario planning, searching for cost-saving strategies, and looking for methods to preserve your cash position. Having visibility into your future cash pipeline helps you make informed decisions about growth, scaling operations, or even investing in new opportunities. The benefit of cashflow forecasting isn’t just about survival; it’s about creating a clear roadmap for financial success.

Keyways to get more from your forecasting

  • Run regular forecasts – The financial landscape is changing on a daily basis at present. A cashflow forecast is not a document that remains static. Variables and external drivers are literally changing each day, so it’s vital that you run frequent forecasts and react swiftly to any projected cash issues as they become apparent.
  • Use the latest cashflow forecasting apps – cashflow forecasting apps, like Fluidly, Float, Futrli Predict or Fathom integrate with your accounting software. They give a drilled-down view of how your cash inflows and outflows will pan out over the coming months – information that will inform and justify the decisions you make during these extremely challenging times.
  • Explore the right revenue streams – most sectors will have seen their sales change over the last 18 months. To overcome this, there’s a real imperative to explore revenue streams and new opportunities for income. This could be offering a new product or service, or working with a new partner. The idea is to find ways to increase the money that’s coming in the door and balance out your unavoidable expenses.
  • Get proactive with cost-cutting – if you can reduce cash outflows to a minimum, that will have a real impact on the health of your future cashflow. Pare back your operations and aim to reduce things like unnecessary software subscriptions, or over-ordering of basic supplies. Negotiating cheaper rates with suppliers, if possible, will also help.
  • Review your staffing needs – it’s never great to make anyone redundant, but you can also look at ways to reduce the costs of staffing and resourcing without getting rid of staff completely. Reducing working hours or redeploying staff in different roles are all options that reduce payroll costs, while also looking after your staff.
  • Run a variety of scenarios – changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan once conditions improve. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.
  • Look at various ways to access funding – if forecasts show a giant cashflow hole coming up, you’re going to need additional funding to get through this crisis. We can assist your business to investigate funding opportunities from grants, banks, loan providers, alternative lenders and crowd-sourcing funders.
    Talk to us about setting up cashflow forecasting

Forecasting is an important step to give you the business intelligence to support your decision making.

Conclusion: Make Cashflow Forecasting a Priority

Cashflow forecasting isn’t just a tool—it’s a necessity. It provides the business intelligence you need to support decision-making, plan for future growth, and navigate challenging financial periods. The insights gained from accurate forecasting allow you to control your cashflow effectively, ensuring that your business remains on solid ground and ready for any challenges ahead.

If you’re not already prioritizing cashflow forecasting, now is the time to start. By improving your cashflow management and leveraging modern forecasting tools, you can gain better control over your finances and make more informed business decisions.

Get in touch with us today to set up cashflow forecasting for your business. Call us at 1300 844 678 or email us at [email protected]. You can also submit a form here to get started. Let us help you take control of your financial future!