How cash flow forecasting is valuable for your business
22 September 2024
In order to effectively manage future cash flow, it's important to forecast your cash flow. This allows you to project your financial position for the upcoming months and take necessary steps, where needed, to protect your cash reserves. This allows you to maintain financial stability, plan for various scenarios, reduce costs, and develop strategies to maintain your cash flow.
Effective Cash flow forecasting strategies
Remaining control of the cash coming into and out of the business is the key focus so you can accurately predict your financial position and resolve any issues. Here are some key ways to get more from your cash flow forecasting.
- Conduct regular forecasts: The financial landscape is changing on a daily basis so a cash flow forecast is not a document that remains static. Variables and external drivers are changing each day, so it’s vital that you run frequent forecasts and react swiftly to any projected cash issues as they become apparent.
- Explore new revenue streams: In light of recent changes in sales and demand for services across many industries, it’s essential to explore new income opportunities. Consider introducing new products or services or partnering with new businesses to boost revenue and manage unavoidable expenses.
- Implement cost-cutting measures: Minimising cash outflows is crucial for maintaining healthy cash flow. Evaluate and reduce unnecessary expenses, such as software subscriptions, or excessive inventory. Negotiating better rates with suppliers can also contribute to cost savings.
- Assess staffing requirements: Nobody wants to make anyone redundant, and there are alternative ways to reduce staffing costs and resourcing without getting rid of staff completely. Reducing working hours or redeploying staff in different roles are options that reduce payroll costs, while also looking after your staff.
- Run various scenarios: When running scenarios, changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan once conditions improve. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.
- Explore funding options: If your cash flow forecasts show a major cash flow deficit coming up, you’ll likely need additional funding to get through. We can assist your business to investigate funding opportunities from grants, banks, loan providers, alternative lenders, and crowd-sourcing funders.
Get started with cash flow forecasting
Talk to us about setting up cash flow forecasting in MYOB. Effective cash flow forecasting is key to in having the right information for sound decision-making. If you’re not already running cash flow forecasting, let us help you enhance your cash flow management and ensure you’re well prepared for the future.
The Christmas season can create payroll challenges, but understanding the rules can help you stay compliant. Annual Leave: By law, employees are entitled to four weeks of paid leave per year. To avoid last-minute staffing problems, set clear deadlines for leave requests. Holiday Pay : Employees must be paid for public holidays that fall on their regular workdays. Keeping up-to-date employee records and rosters ensures accurate payment. Christmas Closures : Plan ahead for any business shutdowns. You must provide at least 14 days' notice before a closure. If an employee doesn’t have enough leave, they must be paid 8% of their gross earnings since their start date or their last leave entitlement, minus any leave paid in advance if agreed upon. Cashing Up Leave : If it’s part of the agreement or you choose to allow it, employees may cash up to one week of annual leave each year. However, you cannot pressure them into doing so. Casual Workers : Casual employees should receive an additional 8% on top of their earnings instead of accruing leave, and this must be clearly shown on their pay slips. With careful planning, you can keep payroll running smoothly, allowing both you and your team to enjoy a stress-free holiday season. Feel free to reach out if you need any assistance or clarification.
This time of year can be hard on small businesses. With a bit of pre-planning and being proactive, you can set yourself up for a financially stress-free holiday. Talk to us. We can help.
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