Cash Flow Forecast in Kent
Plan ahead with confidence
A healthy profit does not always mean your business has enough cash available.
Customers may pay invoices weeks after you issue them, while wages, suppliers, VAT, tax and other expenses still need to be paid on time. A cash flow forecast helps you understand what money is expected to come into and leave your business, giving you a clearer picture of your future cash position.
At Culverhouse & Co, our Chartered Accountants provide cash flow forecasting in Kent to help businesses plan ahead, understand the financial impact of important decisions and manage their cash with greater confidence.
Using financial planning software, we can model different scenarios and help you understand how changes in income, costs or business plans could affect your future cash position.
Speak to our Chartered Accountants today to discuss your cash flow forecast.
What is a cash flow forecast?
A cash flow forecast is a forward-looking estimate of the money expected to come into and go out of your business over a specific period.
Unlike your annual accounts, which tell you what has already happened, a cash flow forecast helps you look ahead.
It can include expected:
-
Customer payments and sales income
-
Supplier and operating costs
-
Wages and payroll
-
VAT and other tax payments
-
Loan repayments
-
Equipment and other major purchases
-
Rent and premises costs
-
Business investments
-
Dividends or drawings
-
Other expected income and expenditure
By comparing expected cash coming in with expected cash going out, you can see how your cash position could change over the coming weeks or months.
Why is cash flow forecasting important?
Cash is essential to the day-to-day running of any business.
A business can be profitable but still experience cash-flow difficulties if money comes in later than expected or significant costs have to be paid before customers settle their invoices.
A cash flow forecast can help you:
-
Identify potential cash shortages before they happen
-
Plan for large or unexpected expenses
-
Understand when tax payments may affect your cash position
-
Decide whether you can afford to recruit additional staff
-
Assess the impact of purchasing equipment or vehicles
-
Plan for expansion or investment
-
Understand when additional finance might be needed
-
Make business decisions with greater confidence
Rather than reacting when your bank balance becomes low, forecasting gives you the opportunity to see potential pressure points in advance and plan accordingly.
Cash flow forecast vs profit: what's the difference?
Profit and cash flow are not the same thing.
For example, your business could issue a £20,000 invoice and record the sale in its accounts, but your customer might not pay you for another 60 days.
During that time, you may still need to pay wages, suppliers, rent and tax.
Your business could therefore be profitable while experiencing a temporary cash shortage.
A cash flow forecast focuses on the timing of money entering and leaving your business, rather than simply whether your business is profitable.
Understanding both your profitability and your future cash position is important when making financial decisions.
What can a cash flow forecast help me plan for?
A good cash flow forecast can be used to model the financial impact of decisions before you make them.
Hiring new staff: Taking on employees creates ongoing costs such as salaries, National Insurance and pension contributions. A forecast can help you understand whether your expected cash position can comfortably support the additional costs.
Buying equipment or vehicles: Large purchases can have a significant short-term effect on your cash position. Forecasting can help you assess the timing and affordability of the investment.
Expanding your premises: Moving to larger premises or opening another location can increase rent, deposits, utilities, staffing and other costs. A forecast can help you understand the potential impact before committing.
Growing your business: Growth can require significant expenditure before the additional income arrives. A cash flow forecast can help you assess whether your existing cash reserves are sufficient to support your plans.
Preparing for tax payments: VAT, PAYE, Corporation Tax and other liabilities can create significant cash requirements at particular times of the year. Including these payments in your forecast can help you prepare for them rather than being caught by surprise.
How far ahead should I forecast?
There is no single forecasting period that is right for every business.
The appropriate period depends on your circumstances, including how predictable your income is, how quickly customers pay, your payment terms, seasonal fluctuations and your planned expenditure.
For some businesses, a detailed short-term cash flow forecast covering the next few weeks or months may be most useful.
For others, a longer-term forecast can help with:
-
Business growth
-
Investment decisions
-
Recruitment
-
Expansion
-
Funding requirements
-
Seasonal planning
A rolling forecast can also be updated regularly as your actual income and expenditure become known.
The important thing is that your cash flow forecast is useful, realistic and kept up to date.
Cash flow forecasting for Kent businesses
Culverhouse & Co provides cash flow forecasting in Kent, South London, Surrey and East Sussex for businesses that want greater visibility and control over their finances.
We work with businesses across Orpington, Bromley, Sevenoaks, Swanley, Edenbridge, Tonbridge, Tunbridge Wells, Maidstone, Chelsfield, Locksbottom, Petts Wood, Dartford, Godstone, Sidcup and East Grinstead, as well as surrounding areas.
Whether you are a new business planning your first year, an established company preparing for expansion or a business experiencing cash-flow pressure, our Chartered Accountants can help you understand what your financial information means for the months ahead.
How Culverhouse & Co can help with Cash Flow Forecasting
We don't believe a cash flow forecast should only be a spreadsheet of numbers; it should help you answer practical questions about your business.
Using your financial information and expert planning software, our Chartered Accountants can help you:
-
Plan for growth and investment
-
Model different business scenarios
-
Consider future funding requirements
-
Forecast future income and expenditure
-
Understand your expected cash position
-
Assess the financial impact of major decisions
-
Identify potential periods of cash-flow pressure
-
Review and update your forecast as circumstances change
Our aim is to give you a clearer picture of what could happen next, so you can make informed decisions about your business.
Take control of your future cash flow
Knowing your current bank balance is important. Knowing what your cash position could look like in the months ahead can help you make better decisions.
A cash flow forecast can give you greater visibility, help you identify potential problems earlier and give you more confidence when planning the future of your business.
If you need a cash flow forecast in Kent, speak to the Chartered Accountants at Culverhouse & Co.
Stay informed with Business Growth & Cash Flow Forecasting guidance
