The first rule of business, as we all know, is that “cash is king.” As a startup, calculations of cashflow projections might be fairly straightforward. However, as the business grows the complexities increase exponentially with the introduction of loans, VAT, Corporation Tax, payroll, PAYE, pensions, stock, suppliers and customers  being paid / paying at different times.

Usually, there is a great deal of data that is known and that can be forecast fairly accurately in the short term.

A model can then be built around sales (taking sales mix and differing margins into account), using sales orders, quotes in the pipeline and other predicted future events.

This model can then project the timing and size of payments for purchases, stock, staff, overheads etc., and receipts from customers in order to provide a projected bank balance.

As we look further into the future, the forecast becomes less predictable, so we can introduce various scenarios to see what happens to the cash requirements. I have built an Excel template that takes all of this information into account, or we can use Futrli. The template also compares actual and forecast Profit & Loss, Balance Sheet and Cashflow forecast to budget – on a monthly basis.

Once the template has been populated with historical and budgeted / forecast data, it can be maintained and reviewed regularly. Surprises will be minimised and time to respond to additional funding requirements can be maximised.

Other areas of the business, apart from cash, that need addressing will be highlighted such as stock turnover and debtor and creditor days.

You will have peace of mind and the knowledge that if funding might be needed in the future, you will already have most of the information that the bank might need to assess their willingness to finance you. By all means get in touch to find out more.