Anu Change helps Businesses with their Financial needs, as QFA (Qualified Financial Advisor) we help business with their financial projections which can be difficult to get your head around but yet, they are really important in showing that a business can be successful and sustainable in the longer term. 
The easiest way of looking at Cashflow Forecasts is to simply ask yourself this question – Will the income (turnover) generated by my business cover all of my business outgoings/expenses? 

 

So how do I go about completing the Cashflow Forecast?

Business Income is your cash inflows, – that is all the ways in which your business is going to generate cash.
This will include all of your Sales  – should be broken down between cash sales and credit sales. Credit sales are sales where you have provided the buyer with credit terms and you will be paid for these at a later stage. 

Outgoings / Business Expenses

Expenses are all of the items that will cost you money to make your business successful.
Firstly look at all your fixed costs – these are all the bills and overheads that you have to pay even if you don’t make one sale  (e.g. rent, rates, utility bills, transport, wages, loan repayments etc)
Now look at variable costs – these are costs that will increase/decrease depending on your volume of sales (e.g. stock, marketing etc). 
 

Business Start-Ups - Cashflow Forecast

First, you should calculate the level of cash that your business will generate (usually from sales) each month.  If you are just starting out, this can be difficult as you have no previous record to base your decision.
Our advice is ‘Take a conservative view and be realistic’ taking into account that the business might not generate any cash in the first few months of trading. 
Ultimately, you will need to show that you can  generate sufficient turnover to cover your costs, outgoings and also cover your loan repayments.

Established Businesses - Cashflow Forecast

If the business is more established, use your records from previous years (financial/management accounts) to help you estimate how much income your business generates on a monthly basis.