Business tips: Have you achieved your goal for the business?

Founding, managing and growing a business is a BIG commitment. For most business owners, it will take years to build a customer following, turn a profit and create a truly scalable business. It’s a journey that can sometimes be pressurised, stressful and risky. – But when your plan really does come together, there is the chance of real success, a lasting legacy and a business that delivers on your initial dream.

So, how do you know when you’ve truly achieved your goals for the business?

Has the business met its growth targets and scaled up as intended?

You’ll have seen your business idea grow from being a fledgling startup, to an established business and on to become a scaled-up, ambitious enterprise with a solid customer base.

If you’ve met these growth targets, then you know you’re on pretty solid ground as a business. Your idea clearly has legs and you’re delivering a product and/or service that your customers see as valuable – and which they’re willing to part with their hard-earned cash to purchase.

Are you running a profitable enterprise that’s in good financial shape?

Running a tight financial ship is crucial. You need solid revenues, positive cashflow and good liquidity to keep your business ticking over.

In the early days of being a startup, cash will have been tight. And your own personal income as a founder and director will probably have been scarce too. But as the business has become more established, you should have found that your business revenue became more stable and predictable – and that your own personal wealth also followed this same reliable pattern. If the business has a solid balance sheet, great cashflow and meets your intended profit targets, you’re onto a good thing – and can be sure that your financial position is in good shape.

Do you have a stable customer base who say good things about you?

Without customers, you don’t have a viable business. Finding your first customers as a startup was probably a significant turning point in your journey. A good customer base brings with it the bonus of new sales, fresh revenues and a business that can actually turn a profit.

When customers engage with you and buy your goods and services, that comfirms your original faith in your business idea. You’re providing something they value and want to purchase, and you’re also building a community of like-minded people who all think your brand is great.

Do you have a team who can operate the business without you?

In the early days, you’ll probably have become a jack (or jill) or all trades. You’ll have run the sales and marketing campaigns, taken care of all the main operational tasks and dealt with the many invoicing, accounting and bookkeeping tasks. Turn the clock forward, and you probably have a team of people around you to take care of these jobs – but could they function with you?

This is really the acid test of whether you’ve scaled and succeeded. If the business is still reliant on you, personally, you have a problem. To be a saleable proposition, a business needs to function effectively without the founder. If not, you’ll never be in a position to sell up. To make this possible, you need a team of engaged and talented people around you – people who share your vision and talents and who can keep the ship on an even course, even once the original captain has set sail on fresh, new adventures.

Do you feel you’ve achieved what you wanted to achieve?

In your formative years as a founder, you’ll have sat down to draw up a startup plan. In that plan you’ll have outlined a clear vision for what this business was going to achieve.

This vision might have been:

  • To scale up over five years, sell-up and retire
  • To deliver a new kind of technical widget and make it the global standard
  • To help your target audience improve their lives, helped by your product/service
  • To provide the income needed for you to live your desired lifestyle
  • To plough your profits back into the local community and be a force for good.

We all have different goals, and whether they are financial, personal or moral comes down to the individual. The important thing at this point is to assess whether you’ve actually met the vision that you set out to achieve. If your aim was to sell for a profit and then retire, are you ready to do this? If the goal was to become a household name and move your sector forward, do your customer engagement figures and market share stats reflect this?

Deep down, only you and your fellow founders know whether you’ve truly met your intended goal. But if the general consensus is that you aced it, then it’s time to think about the future.

What’s the next chapter in your business story?

If you can answer yes to all five of these questions, then congratulations! You’ve built a successful, stable and profitable business.

But what do you do now? Do you continue to plough this fertile furrow and live off the profits? Do you find a buyer for the existing business and start on your next business idea? Or do you sell up and look at retirement and enjoying the benefits of your money and lifestyle?

It’s a good idea to talk to us before you make what is, essentially, a life-changing decision. If you’d like to talk through your options, do get in touch.

Business tips – Scaling up your business and workforce

Scaling up your business isn’t about steady growth over time. It’s about having a clear strategy for quickly expanding the business to achieve full-scale hypergrowth.

Most startups grow organically, adding customers here and there and gradually expanding over time. Scaling up aims to accelerate this process, pushing your growth to move beyond that slow, organic pace. To achieve this, every element of your business model needs to be reviewed, refined and systemised – so you have scalability built into the company from the ground up.

Systemise your processes and build scalability into your DNA

Scaling up is a fast-paced, hectic and transformative process for any business. But with the right planning, strategy and funding, the return on your scale-up investment can be significant. Systemisation is the starting point and the driver of your efficiency.

The aim of your systemisation process is to make the business ordered, standardised and efficient. Look at how the business works. Write down every process and operational action. Then see how these processes can be made as lean and effective as possible, and aim to make these operations easily repeatable – so they can scale on demand as the business grows.

If any processes can be automated, automate them. Automation is a key driver of productivity and efficiency, so make use of any tech that could help you get more streamlined.

Remove yourself from the everyday running of the business

This may sound counterproductive, but a big goal of a scale-up strategy is to make yourself redundant from the everyday business. If all the operational elements of the business have to pass through you, as the founder and CEO, then that limits your ability to scale.

Remove yourself from the equation, so the business can grow without your everyday input at the operational level. This allows the business to function without you, leaving you with more time to focus on the high-level strategic work. That’s more time for business development. More time working on innovation. More time building relationships with customers and suppliers.

Expand your executive team and workforce

Once you’ve stepped back from the day-to-day tasks, your CEO role can become far more of a driving force behind the growth of the business. But you can’t do this single-handedly. You’ll need a close and trusted executive team to work with. Plus an experienced management team who you can delegate to. And an expanded workforce at all levels of the organisation.

As the startup evolves into scale-up, the business will become more complex and the workload will increase. To cope with this and keep the company running like a well-oiled machine you need a team who are ready for the task and fully on-board with your aims for the business.

Increase your operational infrastructure

Hypergrowth of the business means a greater volume of sales and work. To meet this demand, you urgently need to expand your operational infrastructure. That means looking at the size of your workspace. The amount of tech, equipment and machinery you have. And the ways you deliver your end product/service to your increased customer base.

The key here is to apply a LEAN methodology – keeping everything as simple and basic as possible, while also building in the capacity to deal with this increased volume of work. Get the operational procedures out of your own head and turn them into lean, seamless processes. And invest in the equipment and operational systems needed to cope with your increased output.

Look at investment and access to funding

To bring your scale-up plans to life, there’s a need to invest heavily in the future of the business. You’re likely to need new assets and equipment. Larger premises or multiple workspaces. More raw materials or stock. And a bigger workforce – which will mean a larger payroll each month.

You may be in the fortunate position of having plenty of spare cash in your reserves. But for most potential scale-ups, there’s going to be a need for external funding. This could mean you and your fellow directors putting money into the business. It could mean approach lenders and business finance providers to take out a loan. Or it could mean looking for private investors to plough money into the business. Whatever the source of this additional funding, you a clear funding strategy to work from – a funding plan that’s aligned with your scale-up plan.

Share your strategic goal and growth plan

For scaling up to be a success, everyone in the company must be on board with the idea. Make your growth aim and key numbers transparent, so the whole team is engaged and motivated by this common aim. And make sure you have a detailed scale-up plan that factors in the challenges of expanding your workforce, resources and operational infrastructure.

Think about:

  • WHY you want to scale and what the end goal will be
  • HOW you will achieve this – and what the timescales will be
  • WHO you need on board to make this work
  • WHAT new assets and equipment will be needed
  • WHERE the funding will come from to bankroll this plan.

If you’re thinking about scaling up your established startup, please do get in touch. We’ll help you build a viable scale-up plan, with costings, budgets and achievable targets to meet.

Get Your Business Records Ready for Your Tax Return 2022

Organising your documents now will mean you can get your tax return completed earlier and access any refunds due or start planning for tax payments.

Getting your business records up to date and accurate will allow us to work with you proactively to plan for the coming year, which will continue to be unusual (and possibly difficult) for many. It will also be one less thing to do when your normal business activity resumes later in the year!

What Records do you Need to Have Ready for the Tax Agent?

  • Have you bought or sold assets? If so, you need full details of acquisitions and disposals.
  • Have you taken out a new loan or other finance? You must have details of the finance arrangements and statements of monies owing at 30 June.
  • Check that any bonds or deposits paid or received have been allocated correctly.
  • Have you prepaid for insurance or other large business expenses that need to be apportioned to the following financial year? Make note of the portion applicable to the current financial year.
  • Do you carry stock? If so, you need to perform a full stocktake at 30 June (unless you qualify for the simplified trading stock rules).
  • List any doubtful or bad debts to be written off.
  • Review your debtors and creditors (accounts payable and receivable). Is the list current and correct?
  • Do you have loans with related entities? Reconcile the loans to and from each entity to ensure the same value is reported in the accounts of both entities.
  • Ensure that all payments to company directors have been correctly captured. Talk to us now if you want to make director payments before 30 June.
  • Provide records of any government grants received for COVID-19 or natural disaster impacts on your business.
  • Gather records of any COVID-19 related benefits that were provided to staff this financial year as there may be fringe benefits implications.+-
  • If contact details of business owners and key personnel have changed let us know.

We will let you know if there are other matters to discuss with us before completing your tax return, such as cryptocurrency transactions, capital gains, vehicle usage, private usage apportionment or superannuation. This year, there may also be new elements to discuss if you have received grants, refunds, credits or deferrals of business expenses and liabilities.

Remember you need to keep all your business records for seven years, so store everything securely and where possible electronically for safety and ease.

Once you have all your records for the 2022 financial year, make an appointment with us to schedule in your tax return for prompt lodgement.

Business tips: Getting in control of your spending

Keeping the business in a positive cashflow position is vital. But you can only do this if your cash inflows (sales revenues and other income) outweigh your cash outflows (overheads, supplier costs and other liabilities like tax costs or loan repayments).

One way to re-balance the cashflow scales is to get in better control of your spending. This process of ‘spend management’ is all about reviewing your expenses, negotiating better deals with suppliers and getting a razor-sharp focus on reducing your cash outflows.

Review your current suppliers

Once you have a reliable supply chain set up, it’s very easy to fall back on using the same suppliers time and time again. But the reality is that there’s real value in reviewing the suppliers you’re using, so you don’t miss out on any better deals.

Prices will go up and down in the marketplace and new suppliers will appear in the market. So it’s worth regularly checking for alternative providers that can offer cheaper rates, better value prices or longer payment terms etc.

Negotiate better prices with your trusted suppliers

You may be happy with the supplier relationships you have, but still want to cut down on your spending. In this scenario, it’s well worth negotiating. Very few suppliers will want to lose a valued customer, especially if you’re a long-term client who’s bringing in reliable revenues. If the relationship is strong enough they’ll be open to negotiating a deal that works for both of you.

See if you can push the prices down, or get discounts for buying in bulk etc. And, if possible, see if you can get them to agree to a trade credit agreement, where you can pay for the goods and services over a longer period of time, to boost your cashflow.

Rein in your expenses

It may sound obvious, but one of the easiest ways to cut your overall expenditure is to be a bit more frugal with your overall spending. Don’t overspend on stock, raw materials or services. Just buy what you need to stay operational, and keep a close eye on when new orders will be needed, rather than overspending and using up your available cash.

Where day-to-day spending has got out of hand, you can make a big difference to your expenditure by making small changes to your outgoings. If you look at your spending with a fine-tooth comb, you’ll soon find costs and expenses that can be cut back or stopped entirely. Other cash-saving options could include putting a limit on staff expense cards or canceling unnecessary software and magazine subscriptions etc.

Use a purchase order number system

A purchase order number system makes it easier to keep track of your spending. In essence, any purchase made by the business needs a purchase order (PO) number assigned to it, prior to a member of staff buying anything. This allows you to allocate a budget and track the spending against this particular purchase or project.

Having a PO number also makes it easier to track incoming invoices. Suppliers can quote the PO number on their invoice, so you can match the bill to the allocated job and budget.

Use tech to get in control of the numbers

In an ideal world, you want as much oversight over your spending as possible. And with today’s cloud accounting software, expenses apps and inventory tools, it’s easier than ever to manage your expenses and stay in control of the main numbers.

You can use an expense management system, like Pleo, Soldo or DiviPay, to get better oversight of spending and put yourself back in the expenses driving seat.

If you want to streamline your spending, come and talk to us. We’ll help you spot the areas where costs can be cut and use the latest tech to manage the numbers.

Coping with the skyrocketing cost of living

Household living costs are skyrocketing and seem set to keep rising throughout the year. Here are our 12 top tips for coping with the rapidly increasing cost of living – ways to earn more, spend less, and invest in your future.

Whether it’s refilling your petrol tank or paying at the supermarket checkout, the higher cost of living is hitting every household hard.

Across the world, everyday essentials are surging in price, up 7.2% year on year across the OECD. Unfortunately, experts predict that prices will keep rising for at least the rest of the year.

What can you do to try to keep up with the increasing cost of living? Here are our 12 top tips:

Look for ways to earn more

  • Grow your business’s profitability (talk to us about improving your profits) or ask for a pay rise.
  • Take in a boarder or flatmate.
  • Sell your unwanted items online.

Cut back where you can

  • Prepare more meals at home and spend less at cafés and restaurants.
  • Create a budget and keep your spending under control.
  • Reduce the amount of meat you buy.
  • Find ways to use your car less.
  • Cancel your credit cards and your buy now pay later accounts.
  • Review all your ongoing expenses like utilities, insurance and subscriptions – cancel, switch providers or get better deals.

Invest in your future

  • Think about investing in ways that are likely to outperform inflation – both shares and the property market have historically provided returns higher than inflation.
  • Start a new business, launch a new product or service, or try a side hustle.
  • Teach yourself about money and finances using free tools online and books from the library. Better money management will help you make the most of what you’ve got.

If prices rise by 7% this year, it won’t be easy to increase your income by the same amount. But if you can increase your income by 5%, then make up the rest through savings, while also investing for the future, you can still come out on top once inflation settles down and prices stabilise.

Worried about money? Talk to us. We have years of experience through many economic cycles, including previous periods of high inflation – and we’re always here to help.

Buy or Lease Business Assets?

There are certain items of equipment, machinery and hardware that are essential to the operation of your business – whether it’s the delivery van you use to run your home-delivery food service, or the high-end digital printer you use to run your print business.

But when a critical business asset is required, should you buy this item outright or should you lease the item and pay for it in handy monthly instalments?

To buy or to lease?

Buying new pieces of business equipment, plant, machinery or vehicles can be an expensive investment. So, depending on your financial situation, it’s important to weigh up the pros and cons of buying or opting for a leasing option.

First of all, let’s look at why you might decide to buy the item…

Buying: the pros and cons:

  • Pro: It’s a tangible asset – when you buy an item, you own the item outright and it will appear on your balance sheet as one your business assets. As such, by owning these assets outright you increase the perceived capital and value of your business. You can also claim the cost of the asset against your capital allowance for tax purposes.
  • Pro: It’s yours for the life of the asset – once you own the item, you have full use of the equipment for the duration of the life of the asset. Your use of the asset isn’t reliant on you being able to keep up regular lease payments, and if your financial circumstances change then you can sell the asset to free up the capital.
  • Con: It’s an expensive outlay – paying for the item up-front is a large outlay for the business and will require you having the cash to cover this cost. Spending a large lump sum in this way may take cash away from other areas of the business, so you need to be 100% sure that this purchase is the right decision and a sound investment.
  • Con: You may require extra funding – if you don’t have the liquid cash available to buy the item outright, you may need to take out a loan. Asset finance is available from funding providers, but does tie you into a loan agreement that will add to your liabilities as a business – reducing your worth on the balance sheet.

Leasing: the pros and cons:

  • Pro: Leasing has a cheaper entry point – if the item you need to purchase has a large price tag, leasing allows you to make use of the asset without the cost of buying it in full. For startups and smaller businesses with minimal capital behind them, this can make leasing a very attractive option. You may not own the asset, but you can make use of it – and this may be the difference between the success or failure of your business.
  • Pro: You can spread the cost – there is still an associated cost of leasing, but you can spread the cost over a longer period, making it easier to find the necessary liquid cash to meet your lease payments. With this money saved, you can then invest in other areas of the business, helping you to expand, grow and bring in more customers and revenue.
  • Con: You don’t own the asset – there are different types of leasing agreement. Under a capital lease, you do own the asset (once you’ve paid if off). But if you opt for an operating lease, this is a more short-term lease and you won’t own the asset at the end of the contract. Ownership does have its advantages (including being able to sell off the asset if required) so it’s important to consider what kind of leasing agreement you’re entering into and what the advantages/disadvantages may be.
  • Con: You may pay more in the long run – most leasing agreements will attract additional costs and interest on your agreement, so you may well end up paying more than the market price for your asset in the long term. If you can cope with the higher cost, this is fine, but bear in mind that buying outright may have offered greater value.
  • Con: You may lose the use of the asset – if you can’t keep up your lease payments (due to poor cashflow for example) then the owner of the lease agreement may recall the asset. If this item is crucial to your business model, losing this key asset can have a profound impact on your ability to operate. In this respect, leasing is a more risky prospect, but also an easier option for businesses with less cash to splash.

Talk to us about whether buying or leasing is the best way forward

Whether you opt to buy or lease your equipment isn’t always a straightforward decision to make – so it’s a good idea to consult with your accountant early on in the decision-making process.

We’ll help you review your current financial position, assess your available cashflow and look at your regular cost base to decide whether buying or leasing is the right thing for the business.

When Should You Offer Casual Employees A Permanent Position?

Recent court cases involving casual workers have increased attention on casual worker classification, which means your workers may be more aware of the ability to convert to a permanent position.

The law has not changed; however, these cases are good reminders for employers to be aware of the rules around converting casual employees to permanent positions.

What Makes an Employee Casual?

  • No expectation or commitment about duration of employment.
  • No guaranteed hours of work.
  • Usually works irregular hours.
  • Is not entitled to paid leave.
  • Can usually end employment without notice.

Note that there is such a thing as a long-term casual employee. Long-term casuals may be eligible for flexible working arrangements, parental leave and long service leave, even though they don’t have guaranteed hours of work or expectation of ongoing work.

When Does a Casual Employee Become Permanent?

This is addressed in most modern awards in a casual conversion clause. Employers should check the relevant award provisions to see if there is an obligation to offer a part-time or full-time position, then follow the directions about offering permanent positions.

Example of Casual Conversion Rules

Each award must be checked for details, however there are similar guiding principles.

  • Casual employees are entitled to ask to change to full-time or part-time employment when they have worked a regular pattern of hours over a set period (usually 6 to 12 months) and could reasonably expect to continue to work those hours as a full-time or part-time employee without significant changes.
  • Employers must specifically notify casual employees about this entitlement within 12 months of the casual start date.
  • Casual employees that do not receive notification of this entitlement are still entitled to request a change to full-time or part-time employment.
  • An employer can only refuse the request if there are ‘reasonable grounds’ such as the employee not working regular hours or there are other significant changes to the current work patterns.

There are more provisions and details in each award’s casual conversion clause – employers need to check the applicable award to make sure they comply with the casual conversion requirements.

Visit the Fair Work Ombudsman Casual Employees webpage for more detail.

Talk to us if we can help with payroll management and assessing the classification of your workers.

Understanding Your Revenue Drivers

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, an increase in online consumer buying and a ‘new normal’ when it comes to trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Import areas to consider will include:

  • Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.
  • Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
  • Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
  • Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

Efficiency Through Automation

Automation

Lockdown forced us to rethink the way we operate our business. The barrier of procrastination has been removed and we’ve had to adopt new technology and automate our processes.

Technology exists to increase efficiency, but it can be a double-edged sword. When you apply automation to an efficient operation, it will magnify the efficiency. However, if you automate an inefficient operation, it will magnify the inefficiency. In other words, we must first ensure our systems and processes are efficient before introducing automation.

Review all of your existing technology, processes and systems to determine any that are obsolete. For example, texting for business is now the norm; instead of calling customers to remind them of an appointment, first send an automated text message asking them to reply ‘yes’ to confirm attendance. This will reduce time spent on follow ups and no-shows.

There are many benefits of improved systemisation and technology adoption:

1. Leverage. Getting more done with less effort (e.g. automated monthly management reporting systems).
2. Consistency. Guaranteeing output quality (e.g. a templated proposal or pricing tool).
3. Efficiency. Automating manual tasks using technology (e.g. auto-coding of transactions using Xero).
4. Risk management. Removing the risk of human error (e.g. an automated bank reconciliation).
5. Scalability. Systemising processes to enable growth without increasing your workload (e.g. a point of sale cashbook system).
6. Saleability. Increasing the value of your business by automating as much as possible.
7. Induction and training. Minimising hands-on training by having robust systems for new team members to follow.

The cost (and disruption) of any new technology or automation must be clearly outweighed by the benefit or time saving. Don’t adopt shiny new technology for the sake of it.

In order to achieve these benefits and avoid systems or processes which serve no useful purpose, it’s important to complete a full technology review. We recommend you do this as part of your Business Recovery Plan which reviews all business improvement opportunities, including in the technology department. Call us for more information.

How To Create A Cash Flow Forecast For Your Business

A cash flow forecast is an important tool for business planning. And right now, understanding the cash coming in and going out of your business is vital.

A cash flow forecast will show you how long your business can continue to survive on current sales levels, by showing you how much money you’ll have in the bank at the end of a period.

It will give you an understanding of what the revenue drivers are in your business and give you visibility of your expenses and the things you can control. Having this information in a forecast will also allow you to plan for different scenarios, work out your priorities and understand the outcomes of different options such as diversification.

A cash flow plan can give you a proactive tool to deal with uncertainty. If you are seeking funding in the form of a loan, applying for business support or just establishing your long term survival, you’ll need a cash flow plan.

What information do you need?

We can help you to create a plan for your business. The plan is only as good as the data you have. So here’s what you’ll need to get started:

Understanding where your cash is coming from

Start with revenue from sales – break your sales figures up by product line and across channels. This will show you where the cash is coming from. For example:

  • Does 80% of your revenue come from only 20% of your products?
  • Do you sell to different markets and does one deliver more revenue than others?
  • Are some of your products high value but low volume or low value at high volume?

The data you collect will enable you to ask questions, such as can you reduce margin to lift sales, can you push volume up or are there other channels to sell through?

Make sure you include all other revenue streams, such as grants, tax refunds or investment in your cash inflows.

Understanding expenses – where is the cash going to?

This will include all the costs associated with your business, including rent, wages, supply materials, bank loan fees and charges, tax bills and electricity.

If you have a bank loan, include the details such as the length of the term and the monthly payments.

Your cash flow plan should also include tax payments when they are due and any capital expenditures.

Some of your variable expenses will directly relate to revenue such as freight or materials. When your sales stop, these will drop too, so your cash flow plan should reflect this relationship in order for you to scenario plan.

Controlling expenses – what costs are fixed and what are the variable costs that you can control? You may not be able to stop fixed expenses like rent, power and internet, but you could reduce the cash going out on petrol and travel, cleaning and even directors’ drawings.

Making informed decisions in your business

A good cash flow forecast will collate all the data from your business in one place. It will allow you to plan and work out how long your business can weather a storm. It will also help you make decisions around staffing, purchasing inventory, ordering supply materials or investing in growth.

It’s worth remembering that a cash flow plan is a different tool to a budget. Here’s one example: a budget will show sales but a cash flow plan will show the cash benefit of those sales. If you offer credit to customers, your sales may not result in immediate cash flow.

Want to get a handle on cash flow in your business?

If you’re not certain of how to get this information from your accounting software, talk to us about which reports to run. You may need a combination of accounting software reports and projected figures.

Use the information above to source the data you’ll need and get in touch. We can help you build a plan that gives you cash flow projections to assist your decision making.

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