Report name: Sample Forecast

Forecast Cash Flow and Bank Balance Budget

The monthly cashflow forecast for income, expenditure, the bank, loans, plus undrawn cash from overdraft and (if selected) factoring /supply chain finance

Cash Flow Forecasting and Deficits

Companies do not fail simply because of losses, they fail because they have run out of cash. Indeed, most companies that go into administration will have had a positive value for the profit and loss account.

Your business must pay its bills on time, which is why this cash flow forecast matters. If any month is returning a deficit for the bank plus undrawn financing, you will need to review your proposed figures for expenditure or borrowings in order to eliminate that.

Using the What-If Calculator for this is strongly recommended.

Revise Wages, Fixed Overheads and Year-End Stock

One approach (among many) to improve overall cash flow is to adjust your forecast for wages, fixed overheads  and cash you propose to tie up in year-end stock. Here, using the What-If Calculator, these are reduced by degrees of 5%.

Revise Fixed Assets and Year-End Stock

Reducing investment in both fixed assetsand year-end stock will also make a big difference to cash flow. Here, new main pool fixed assets (plant & machinery, fixtures equipment and commercial vehicles) are set at 30,000 for year 1 and at 25,000 for new company cars; a total of 55,000. These are assumed to be 70& asset financed over 24 months.

Stock / inventory is again reduced by 10% while taking out first new cars, then new main pool assets illustrates an alternative route towards achieving significant benefits to turning borrowings into surpluses and overdrafts into cash in the bank. 

Short Term Loans and Cash Flows

A forecast returning cashflow deficits can always be resolved by increased forecast loans or bank overdraft.

That should only be the case though after all possible changes to the business plan have been made for planned expenditure on overheads and investment. While increasing borrowings will eliminate deficits they do not solve the problems or mistakes that create the need for them.

Factoring / Supply Chain Financing and Cash Flow

For a company selling the bulk of its products on open credit, factoring / invoice discounting can be an ideal solution, especially in the case of a seasonal business.

There are costs, for example there may be a small service charge on factored invoicing and of course interest, wgich should be around the same as a bank overdraft. The cash flow that results can transform a growing company's prospects as our Interactive Factoring and Cash Chart makes clear.

Dealing with the right providers is important though and the thing to look out for is whether or not a factor / invoice discounter is a member of the Asset Backed Finance Association; now incorporated into the UK Finance Association.