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How to create a cash flow forecast for your business

May 5th, 2020

Chris Lynch, Managing Director


Dear all,


A good cash flow forecast will show you how long your business can weather a storm. Once you have the data in one place it will also help with every business decision. Get in touch to create a cash flow plan today.


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.


More help for Business Owners

Getting ready to return to business is the priority for now. If you are not a business owner please pass this information onto someone you know will benefit.

The Government has allocated additional $25m funding provided to the Regional Business Partner Network to support business survive immediate aftermath of COVID-19 and transition into recovery mode.


We are registered with the Regional Business Partners Network to assist you to get the help that you may require for your business.

Here are services that we offer, and you could apply immediately, fully funded by the Regional Business Partners.


  1. Cashflow Forecast and Management – see details
  2. Business Continuity Plan – see details
  3. Business Continuity Plan Review – see details


Please register with us your interest in these services. Camelia will guide you through the registration process to get your funding.


We are looking forward to hearing from you.


Chris Lynch, CA

Managing Director, Lynch & Associates Limited

Get in touch by Email or Phone: +64 9 366 6008

Chris is the founding Director of Lynch & Associates Limited.

He qualified as a CA in 1973 and is a full member of the College of NZICA now merged with CAANZ. His expertise is in the areas of tax, accounting, business development, forecasting, and auditing. He has a clear focus on adding value to his clients lives and businesses and seeing the people behind the numbers.

Chris experience includes working as a CFO and company secretary for some of New Zealand’s leading companies before starting his own CA firm in 1999. In his previous roles Chris has worked in the wool, dairy, engineering FCG, banking and investment banking and stock broking industries.

Today he uses this vast experience to assist his clients add value to their businesses and personal lives.