Cash Flow Forecasting, Your Small Business, and You

This informative post was brought to you by Catriona Bane. Catriona is a Marketing Assistant at Float. She is a graduate of English Literature from the University of Edinburgh and is diving head first into the world of digital marketing. She’s always on the hunt for a good book and a hot cup of coffee.

You may think that cash flow forecasting is only for businesses in a cash crisis. But that couldn’t be further from the truth.

Actually, a cash flow forecast can be a valuable growth tool, letting you know that you have the right money at the right time. Monitoring your cash flow can help you to anticipate cash shortages and surpluses, well in advance.

Spotting Cash Shortages

A well-made cash flow forecast can help you spot cash gaps before they become a problem. This means that you can negotiate better loan rates, tighten up your credit control systems, and manage expectations with your suppliers.

As they say, forewarned is forearmed. Being aware of approaching cash gaps can mean saving your business rather than waiting for insolvency.

Making the Most of a Cash Surplus

For any growing businesses it’s essential to be aware of, and take advantage of, a cash surplus. With money in the bank, you have the opportunity to invest and grow your business. Seeing those dollar signs in your bank may feel amazing but the only thing you’ll be gathering is dust if your cash remains where it is.  

Cash flow forecasting allows you to know exactly how much, and when, you can reinvest in your business. By incorporating a forecast into your financial management systems you can guarantee that your business grows at a sustainable rate.

Cloud-based software like Float can help you to visually spot cash shortages and surpluses; giving you enough time to take action. By pulling your invoices and bills directly from your accounting software, forecasting your cash is painless and more accurate than ever. With less stress and a better night’s sleep, investing in a tech stack can be the solution to your cash flow problems.

Confidence in Your Finances

Being profitable doesn’t mean than you have cash available. It also doesn’t mean that your business will last.

A profit and loss budget only tells you half the story of your business’ finances. And to run your business with confidence you need the whole picture. Without a strong grasp on the cash available to you, you’ll be unable to make informed decisions for you and your business.

Including a cash flow forecast into your management systems can show you where you need to tighten credit control systems, cut overheads, or hire new staff to carry the weight.

Your cash flow forecast is a vital business management tool. It can make you aware of critical changes to your finances before you hit a cash crisis. Strengthening your awareness of how, when, and why money is moving into and out of your business can allow you to make the right decisions at exactly the right time.