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We combine our traditional accounting skills and experience with the latest software to keep costs down. Good financial modelling can also mean the difference between impressing potential investors or a bank or other lending institution your business may seek finance from and being turned down. Information is only useful if it provides actionable insights relevant to manage and plan for your business. Thought, planning and strategic insights are important for good financial modelling.Ī financial model for one type of business can vary hugely from another of a different type or in a different industry. Putting together management information is not just about running figures and creating impressive sales forecasts or nice looking charts, graphs and data. Experienced investors will make judgments based on how you have been running the business and your financial projections and discipline. The same point applies if you are seeking to grow your business by attracting private equity or preparing for sale. When approaching a bank for a loan or overdraft your prospects are likely to be much better if the bank is reassured that you have good financial information and disciplines in place and that you use the information you have well.Īpproaching a bank with no or poor cash flow forecasts, no or an inadequate budget and lack of planning and strategy may well raise a big “red flag” for that bank and result in significantly reduced chances of securing finance. Most business will, at some point, need to seek finance from external sources, the most common route being bank loans or finance.
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This is where an external set of eyes and ears can be really useful – it is an exercise we at Accounts & Legal undertake for many clients. Deeper analysis is often where the best insights come from to keep your business in good cash flow shape and ahead of competitors. Good analysis – it can be very tempting and understandable for a busy small business owner to want to just cast an eye over latest sales information financial reports for headline information.Forecasts need to be monitored and updated as necessary Business needs differ but a forecast, just like a business plan, is not something to obtain and then forget about. Not relying on a forecast which was prepared some time ago.Keeping the information updated as regularly as is necessary and ensuring information is always comprehensive.
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Key aspects of good cashflow and sales forecasting are :. For example, if your cash flow analysis shows that your customers are starting to pay more slowly, this could be an indicator and warning that they are struggling and that you need to tighten credit or perhaps that your industry or the economy generally are facing a difficult period ahead. Good habits in financial recording and forecastingĮnsuring that information is up-to-date is a very good habit to have for your business as is analysing the information and spotting trends or issues early, either positive or negative. In some cases, this is difficult to avoid but in many cases, a clear plan, strategy, monitoring and measuring and good risk analysis can minimise the risk.Ĭash flow forecasts, budgets and management accounts can help assess and identify likely positive increases in cash flow, which may signal the opportunity to strategically invest or expand but may also identify potential weaknesses such as how quickly vital new stocks are arriving after being ordered or how long it takes debtors to pay. Many businesses which are otherwise well run and have an excellent product or service unfortunately fail due to a cash shortfall or cash crunch. Financial forecasts, cash flow and budgets for SME businessĬash is the lifeblood of any business and access to enough cash to meet needs is essential for survival.