If you are looking for the simplest way to make a cashflow projection, follow these 4 reliable points from Melbourne business coach, David Guest, on making and utilising cashflow projections.
Your past cash flow looks similar to the future
Collect your last six months worth of cashflow results. When you have the past results in front of you to review, you have a perfect view into what your future cash flow will look like.
You’ll find the process so much easier starting your cashflow projections this way.
What changes can you see?
Look for and consider the changes that you have made over the six months, ensure that you make a note of how this is going to affect your cashflow.
For example, have you found that one of your suppliers has a discount for buying product in bigger bulk that previous? When did this discount start? And how did this affect your spending and your earning?
To include changes in your cashflow projection, make sure they have actually made an impact. It may also be important to see how changes affect your cashflow before you start including them in your projections.
Don’t be too confident in your cashflow projections
Estimates are not worth relying on. Make sure that you are looking into projections to get a better idea of where your business is going and how to organise around your cashflow.
There will always be variations in your projection, whether your projection is less than or more than your business’s earnings. The idea of making a cashflow projection is so you can be prepared and organise your spendings and earnings around this projection.
Double check the unexpected
If your cashflow projection is not what you expected, double check it. Even if the month’s projection is out of line with the last six months, double check your figures.
Look for unusual figures or unexpected costs and earnings. Don’t go into the next month with confidence, only to end up with a crisis. Likewise, don’t set out with frugality, only to find that this is your time for taking the next step with your business.
To move up a level with your cashflow projections, speak with David Guest, Melbourne business coach, for further advice.