Top five business forecast tips

Cash, as they say, is King.

And cash flow is one of the main reasons that small businesses find themselves throwing the towel in, especially during early days of trading.

With this in mind, it is imperative that business owners forecast their cash flow regularly and as accurately as possible, no matter how big or small the company may be.

Here are our top five business forecast tips (in no particular order):

Predict sales based on your invoice date

When you are working out your sales figures for the month, don’t forget to add them up by the actual amount of work that you have invoiced out – not the amount that you think you will actually get paid. This is a different matter and will feature in your cash flow forecast.

Remember to include outgoings

It is important to include as many costs as possible when forecasting your pennies – include daily running costs no matter how trivial they may seem as they can soon mount up!

In addition, remember to count costs like depreciation of assets; just because they don’t actually leave your bank account, it doesn’t mean they aren’t there!

Factor in the VAT

Ensure that, if your business is VAT registered, that your sales forecast, and profit and loss forecast exclude any VAT that you will be invoicing out and reclaiming.

If you can’t reclaim VAT on certain items i.e. business entertaining, or if you are registered on the VAT flat rate scheme, you should include the VAT as part of your running costs in when you are calculating your profit and loss forecast.

When it comes to cash flow forecast, include the VAT in your turnover figures.

Cash flow forecast dates

Cash flow forecasts are different from sales and profit forecasts, as cash flow is when you actually receive monies and pay monies out.

Make sure that you make your calculations allowing reasonable time for payments, remembering clients who may pay better – or worse! – than others.

Set monies aside

Remember to set monies aside for important payments that must be paid i.e. VAT.

We hope that you have found our top five business forecast tips helpful – for any taxation, accountancy or business information or advice, request a free of charge call back from our website or call 01902 837 408 today!