The King of Cashflow: learn how to predict the future

A lot of businesses are getting great at sorting their short
term cash flow, but I see so many who haven’t put any thought to
the future.

That’s where the King of Cashflow comes in! I’ve got a plan
that’ll get you predicting the future and dodging all manner of
cash flow crisis.

Know your horizons

It’s best to have three time horizons for projections, each with
their own aims.

1. Weekly

Week to week, you’ve got to know where you’re cash is and what
you’ll be investing it in. Short term planning will let you buy
your stock and pay your suppliers without running dry.

2. Monthly

This is the difficult one. When thinking by the month, aim to
know exactly how much cash you’ll need to hand to stay out of
trouble. Once you have that figure, note where all your cash is
coming from and make sure what you’re going to have exceeds what
you’ll need.

When making your predictions, think about the times of year that
are likely to put unusual strains on your cash flow. Is your
business seasonal in any way? Be prepaid for a drop in cashflow,
especially if you might end up needing a loan.

3. Yearly

Not even the King of Cashflow knows exactly what’s going to
happen in 2015, but that doesn’t mean I don’t plan. Have cash flow
goals and plan for them, because even if your predications end up
being way off, you’ll be more prepared than if you’ve never
considered the options.

With these three time scales in mind, you’ll avoid any unwelcome
surprises.

Prepare for the best

When your business is growing, it’s all too easy to be caught
unaware by sharp cost increases, so it’s important to factor in
some growth to your monthly and yearly predictions.

Create a spreadsheet and test out what position you’ll be in if
your orders unexpectedly rise by 25, 50 or even 100%.

In the same way, break down your costs as much as possible. Make
sure increases to individual bills, employee costs or taxes won’t
cripple you.

If any of this rings alarms bells, don’t wait around to until it
happens, act now!

It could be as simple as keeping separate cash piles for these
emergencies, or you could ask for invoices to be paid earlier in
months when things are looking tight. However you do it, be
prepared for the future!

via Small business advice from Smarta http://www.smarta.com/blog/2013/4/the-king-of-cashflow-learn-how-to-predict-the-future

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About cashflowkiller

Hi! I’m James and am passionate about my small businesses. A strong cashflow is vital for us so I will be curating the latest on cashflow and business news.

One response to “The King of Cashflow: learn how to predict the future”

  1. pozycjonowanie says :

    Keep on working, great job!

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