Forecasting cash flow can be complicated, but increasing your projection accuracy will help you on the management end of things. Here are several tips companies and financial directors take to control their cash flow forecasts and be at their most practical and productive state.
Articulate Your Plans Clearly
Take time to visualize the next step you want to take and set up action plans accordingly. This will position you to increase your odds of making much better predictions about the income your business will generate. Conversely, when goals and decisions aren’t made intentionally, your earnings are less likely to meet reality.
Do Regular Sales Forecasting
Clear stages and a solid comprehension of your sales cycle shape sales forecasts and help you make more informed decisions about future strategies. A business that is clear about its sales cycle is far more likely to predict its cash flow accurately.
Look at Your Budget Versus the Actual Event
With the regular comparison of your supposed projections and what happened, you’ll be able to train yourself to understand the root causes of your errors. Examine the actions you go through to formulate a prediction and delve into your assumptions. Then, you’ll be set up to refine your projections over time.
Remember All Your Expenses
It’s all too easy to overlook cash flow going into your business or leave out expenses altogether. As long as you list everything, be sure you don’t have any discounted costs. Verify your figures and double-check. More significant payments are often dangerous and, therefore, should be closely scrutinized just before paying.
Keep Your Cash Flow Projections Up to Date
Finance forecast maintenance can be a lengthy, mentally straining chore that can lead to chaotic numbers if you neglect to do it. Letting it slide is simple, but if you do so, everything will go to pot.
This way, you can set up a specific purpose in your calendar for this task and stay on track. Focus on taking small steps over and over, and you’ll be fine. We cannot emphasize the importance of cash flow forecasting enough.
With MoolahMore, cash flow planning, budgeting, and cash flow forecasting are as easy as A to Z. MoolahMore will handle all those complex tasks and make them more manageable, so you can sit back and cut yourself some slack. Do more with MoolahMore!
Involve Your Different Departments
Unless one individual has all the information necessary to produce accurate forecasts, it’s improbable that just one company will make real cash flow projections. Often, different companies make forecasts utilizing different people and other departments.
Always talk to both the sales and marketing departments, and communicate with anyone who influences the amount of money coming into the business or going out of the company.
Have a Stringent Credit Control Process
It pays to actively seek payment from your customers before their due dates to make sure they settle down their dues promptly. Remember that if you continually obtain compensation from your customers earlier than their due dates, they are much less likely to factor late or delayed payment into their overall cash flow.
Without a method for collecting payments, customers will pay you when they want, making it incredibly difficult to develop predicted cash flows.
Use the Best Method to Forecast Cash Flows
The direct method is a less accurate way of financial forecasting than the indirect approach. Conversely, the latter is a quick method of forecasting expenses but comparatively inaccurate over the long term. Determine why you’re making cash flow predictions and select a plan that best fits your goals.
The more time you spend forecasting cash flow, the better you’ll become at recognizing the rhythms of your business, as well as recognizing how you can apply different controls in strategic areas in which possible.
Cash flow planning and budgeting can be a complicated process. That’s where MoolahMore steps in. MoolahMore is a cash flow forecasting tool for business owners, accountants, and finance departments. We integrate with Xero and Quickbooks Online to enable you to easily access helpful information with a few clicks and give you an accurate view of your cash flow.
Best of all, MoolahMore tracks real-time data from your financial accounts, so we provide a live, constantly up-to-date forecast that never gets outdated.
Don’t panic; MoolahMore will prevent your business from sinking like the Titanic! Do more. Be more. Use MoolahMore!