19th August 2021   |   Accounting

Cash flow forecasting

Cash flow forecasting is the key to sustainability in uncertain times like now. It is crucial to know and protect the strength of your balance sheet in the current volatile market. 

A cash flow forecast should be top of the minds for all business owners navigating this latest round of lockdowns. For business owners not quite confident to do it on their own they can engage an accountant to gather the information. 

Other key trackers include outflows — the cost of sales (parts, labour), operational costs, WorkCover, GST, PAYG, payroll tax, super and any other statutory costs — and finance products.

It’s important to track how your business funding functions are with these inflows and outflows and to manage your cash flow responsibly.

How a cash flow forecast can help you plug gaps

  • Negotiating with creditors to defer payments or get better payment terms.
  • Reducing debtors’ sales outstanding (DSO).
  • “One lever is to put in place the capability to purchase at a better price, maybe by taking early payment discounts.
  • Cost out is another lever. What is your cost base?
  • Increasing productivity
  • Chasing sales
  • Invoice in a timely fashion
  • Reposition payroll (while the business is small) to be fortnightly in arrears, to ensure a working capital buffer
  • Investing in systems and processes before the business grows too big
  • ATO payment plans

Another reason why it’s important to have solid Cash flow forecasting in place, as this will help when you deal with the ATO and with potential financiers or investors.

If you need a cash flow forecast, contact us at info@Ax3.com.au

To see our services please click services

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