Waterbessie Street, Roodekrans

Cash Flow Predictions

The Purpose of Cash Flow Predictions

A good cash flow analysis might be the most important item of documentation that your business plan includes. Cash flow predictions are designed to ascertain if the business will generate enough income in the upcoming months to support its various business activities, strategies and tactics. Your cash flow requirements need to be predicted in advance – without the required income, your business certainly will not be able to pay the bills and accounts in the near future.

Cash flow predictions or “cash flow forecasting” as it is often referred to, is a very important part of your business’ financial management. It is important to plan ahead in terms of cash flow so that potential liquidity and insolvency can be avoided. For start-up businesses and small enterprises, cash flow predictions are essential. In fact, they are considered compulsory when applying for any kind of credit or financial assistance.

How often should you carry out cash flow predictions? This certainly depends on the financial security of your business. For a business going through financial difficulties or with a very tight budget to work with, cash flow forecasting must be carried out far more regularly than other more financially secure companies. It is best to work with your accountant, bookkeeper or financial advisor to ensure that a close eye can be kept on how the business is managing its finances and how this will affect the business in the future.

We assist business, small and large, with their regular cash flow predictions in order to do the following:

• Ascertain shortfalls in cash balances ahead of time. This serves as an early alert to potential cash flow problems.
• Ensure that the business will be able to generate sufficient funds to pay bills, accounts and employees without getting into debt.
• Keep track of incoming payments and prepare for any financial problems that may arise from customers paying late or not paying at all.
• To provide forecasts to stakeholders such as banks or investors.
• Provide financial supporting documentation to potential moneylenders such as banks and other financial institutions.

The team of professionals at Tax Leaders will ensure that an accurate cash flow forecast is provided and that you are made aware of any potentially worrying concerns or upcoming financial difficulties. If you would like assistance with professional, accurate cash flow predictions, contact us via email or telephone at Tax Leaders today or at your earliest convenience.