Cash flow and profit forecasts

Essential tools for a successful business

Cash flow forecast

One of the most common causes of new business failures is a lack of cash flow. Ultimately, if the amount of money flowing out of your business in the form of purchases and overheads, is more than the amount of money flowing into your business in the form of sales and finance on an ongoing basis, then your business is doomed to failure even though it might actually be profitable.

To help ensure that your new business venture will not run out of money whilst it is still growing, you must prepare a cash flow forecast to calculate what the financial position of the business will be at each stage of its development. Usually a monthly cash flow forecast is sufficient for these purposes.

A good cash flow forecast will detail all the expected money flows into and out of the business and the estimated timing of these receipts and payments. There can often be a time lag between the dates you must physically pay for your purchases and expenses, and the dates you receive payments from your customers.

Profit and loss forecasts

Knowing the difference between how much money your business is physically receiving and how much of this is actual profit, is essential if you are going to be successful in the long term.

It's important not to focus too much attention on your sales and the price of your goods or services. You must not forget to consider how much your purchases and overheads will impact on your takings.

Creating a profit and loss forecast will help you to identify whether your business idea can be profitable going forward and how long this might take. It will help you to focus your attention on the costs your business is likely to incur and how they might be minimised.

Get in touch

We are experts in accounts preparation, cash flow and profit and loss forecasts. We can help you put together suitable spreadsheets and forecasts for your new venture and help you to monitor the profitability of your business as it develops. We also have free templates available which you are welcome to use.

Why not get in touch for a free and friendly chat to discuss your needs.