2 minute read

CASHFLOW FORECASTING

Creating a cashflow forecast at the beginning of the year is the best way to remain on track with your targets for the year.

Anew year is a clean slate to start making those business changes that we may have thought about for a long time but have yet to get to. The key here is to not commit to too much – and what you do commit to, communicate it to others to make yourself accountable.

In business, February to March is the time to get your forecasting done (with a March balance date). So what is forecasting, and why should you do it? Forecasting, or a projection, is the processing of budgeting income and expenses, capital expenditure – and therefore cashflow – for a period. The forecast will aid in planning and decisionmaking for the coming year.

The key benefits of an annual cashflow forecast are:

• It gives you an understanding of your cashflow for better decision-making

• Enables you to predict and plan for large cash outflows

• Identifies key drivers of cashflow in your business

• Allows you to monitor your actual cashflow against forecast in your accounting software

• Provides peace of mind that your cashflow needs are known and properly funded

• Improves communication and relationships with your financiers and suppliers

If you haven’t done a forecast before, I highly recommend speaking with your accountant. If you know how much money will be coming out of your business, and when, you can confidently plan and execute desired growth and improvement strategies to achieve positive changes.

Working with your accountant is the best way to prepare a forecast accurately. They will likely draft up a forecast based on previous years’ data and then meet with you to discuss forward-thinking changes to input into the forecast. You then have a budgeted P&L, balance sheet and cashflow.

Reporting your forecast against actual performance throughout the year is a great motivator and ensures that you remain on track. If you find you aren’t on track, you can act a lot quicker than if you wait until the end of the financial year to make changes needed as a result of unplanned performance.

Good luck for the coming year and exceeding your forecast expectations.

Email: roylancew@vazeychild.co.nz

Phone: (07) 838 5988

Website: vazeychild.co.nz

VARTA ProMotive AGM is designed to optimally support drivers and their trucks during their time on the road. Since the demand for nonstop transportation services requires trucks to be on the road every day, drivers spend more time in the cabin than ever before. The Varta A1 AGM truck battery leads with high vibration resistance, excellent charge acceptance, extended cycle life and increased depth of charge, allowing fleets to equip drivers’ cabins with hoteling functions without draining the battery, avoid downtime and maximise productivity.

It all starts with

NZ Trucking Association can be contacted on 0800 338 338 or info@nztruckingassn.co.nz

This article is from: