Are you failing to account for the regular overheads in your business?
Every business owner should know when it’s time to pay wages, rent, tax and VAT and also have a good idea of how much they are going to be.
But when it comes around to paying them, then these are often the overheads which many business owners simply don’t have the cash flow for, and it’s these bills which cause many businesses to go under.
The reason is partly understandable as these tend to be big bills but it is often a symptom of an internal problem as the business fails to account for them.
A cash flow forecast is a fundamental management tool for a business.
It is the means by which future bills can be factored into current decisions and help to avoid spending money now that ought to be allocated for other uses.
It is a policy that requires discipline, particularly for new and growing businesses and is a difficult shift to manage for a business already experiencing tight cash flows but it is the only way in which the situation will be brought under managed control.
Create or update a cash flow for your business.
The process of recording all those known and expected ‘ins’ and ‘outs’ can be time-consuming to set up but essential for a managed business.
The timescale will depend on purpose but a rolling monthly and annual plan is fairly common.
Over a period of time it will help to bring the business back under your control with more effective decision–making, helping to avoid unnecessary financial costs and reducing stress levels.
Thanks ever so much for taking the time to read my post I truly hope you’ve found it useful and insightful. If you have any questions feel free to contact us!
I am Annette Ferguson, CEO of Annette & Co. Chartered Accountant, Profit First Professional and creator of the Business Wealth Engine. We’re also SUPER social so don’t forget to follow. Here’s to your success!