Last Tuesday I shared with you a personal cash flow forecast.
This week we repeat the exercise but this time focusing on your business.
When I meet monthly with my coaching clients, we first take a look at their management accounts (otherwise known as Profit & Loss Statement) and I ask their book-keeper or accountant to prepare this information for the last full trading month and for the trading Year to Date (YTD).
In the world of cloud-based accountancy software, this information is arriving more quickly after the month end.
At the start of our working relationship, I ask if a 12-month budget & cash flow forecast have been prepared for the current trading year?
This is seldom the case.
Which brings us to today’s attachment.
We begin by estimating income and expenditure for the coming year. This can often be a combination of guess-work and a review of the previous year’s figures.
Once the forecast has been completed, the budgeted figures for each completed month are replaced by “actuals”.
In this way, over the year, we can begin to see how accurate the estimates were and also how far on or off course we are for the targeted results.
The benefit of this is that as clients become accustomed to completing this spreadsheet every month, they start to feel the pulse of the finances in their business and stay on track.
The attachment follows – I strongly suggest that you replace the headings and numbers with your own information and, perhaps for the first time, build your own financial route-map.
Another tip is to get your senior team members involved in the process of collecting, collating and analysing the data – understanding how the money flows through your business can be a healthy eye-opener for them.
7c Professional Budget & Cash Flow Forecast