We know that it’s not always possible to take these actions, but it’s much easier to do so when you’ve planned ahead. Trying to grow your sales and margins – or slowing down growth, if that’s causing a problem.Agreeing extended credit terms from suppliers for that period.If this happens, you can prepare for it by Your forecast might show that you’ll be short on cash in the near future. “Small businesses should check regularly that their most important customers are not at risk of failure,” says the Federation of Small Businesses (FSB). When creating a cashflow forecast, you’ll need to consider a range of possible scenarios including the impact of sales going above, or below, your expectations. You’ll be able to anticipate the unexpected Your forecast will show whether you’re realistically able to fulfil these orders without exhausting your resources or staff, or damaging your existing trade. You can also take into account new factors, such as unexpectedly large orders. Plus, you’ll be able to do this at any stage in your business. With accurate forecasting, you can make multiple projections to see how much extra cash you’d need to fund various scenarios that are intended to grow sales. While increases in sales are often celebrated, it’s worth remembering that extra orders can mean extra fulfilment costs, which could reduce your cashflow in the short term. Today’s sales are the source of tomorrow's cashflow. There are many benefits to creating a cashflow forecast for your business, and we’ll take a look at some of these below. If you’re unsure about creating one, we’ll guide you through the process in the ‘Creating a forecast’ tab. A cashflow forecast lets you take a look at the status of your bank account on a month-by-month basis, over the coming year.
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