Cash Flow Management - The Value of Forecasting
A cash flow forecast is a critical tool for business managers. It provides short and medium term visibility of the coming peaks and troughs in cash balances, allowing management to plan investment decisions and identify problems before they occur.
Forecasting is an imprecise process; it is a best guess of what is going to happen based on previous experience and knowledge of likely receipts and payments.
Cash flow management involves creating one or more potential forecasts and putting plans in place to resolve issues raised by the projections.
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How To Forecast Cash Flow
A cash flow usually starts from the current cash position which is then amended by predicted cash inflows and outflows during a specific period, such as a week or a month.
The process is repeated over a succession of weeks or months to create a picture of what the cash flow might look like in the near future.
Care must be taken not to be too optimistic about receipts; good cash flow management requires a realistic approach that errs on the side of caution.
Where there is uncertainty about the timing of significant payments or receipts the cash flow forecast will need to reflect various potential outcomes. Contingency measures may need to be put in place in case the worst-case scenario occurs.
Cash flow management is an ongoing process with projections that may need to be reviewed weekly or even daily.
Cash Management Solutions
Cash flow monitoring can be resource intensive. Boosting the amount of cash available reduces the level of risk and allows staff to focus on more productive tasks.
One way to increase the level of cash available is to increase borrowing through loans or an overdraft.
Another way is to take advantage of invoice factoring or discounting services. These unlock cash that is tied up in the sales ledger, giving firms access to funds up to 90 days earlier. Invoice finance can be arranged quickly and easily and has the added advantage of not tying up assets as security.
Cash Flow Advice From Touch Financial
We have helped thousands of UK businesses to resolve their cash flow challenges by introducing them to flexible and cost-effective solutions. We are the UK’s leading commercial finance broker and we find ways for organisations to boost their liquidity, to either help them grow or simply to weather challenges more effectively.
The advantage to you is that our services are entirely free of charge. Because our fees are paid by the funders we can offer you impartial, independent advice that costs you nothing. Our expert advisors are focused entirely on presenting you with the best options; our internal structure ensures they are not influenced other considerations.
So if your business is looking for ways to fix cash flow problems or just wants to relieve the pressure on its bank balance in order to focus on business development, why not get in touch in with us? Our advisors would be pleased to give you a no-obligation consultation, so give us a call today.
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Also in this section:
- Managing and Optimising Your Cash Flow
- The Importance of Cash Flow
- Cash Flow – Introduction to Cash Movements
- Cash Flow Options for New Business
- Tips To Improve Your Business Cash Flow
- Understanding Your Cash Flow Finance Options
- Spotting and Avoiding Cashflow Problems
Every month Touch Financial help businesses improve their cash flow with invoice finance. Request a quote to find out how much extra cash you could raise.
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