Budgets, Forecasts and Cashflows
Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed and should allow you to forecast what you are likely to earn and spend for a specific period. It can also provide a means of monitoring and controlling your business, particularly if you analyse the differences between your actual and budgeted income and expenditure.
Cash is the oxygen that enables a business to survive and prosper and is the primary indicator of business health. While a business can survive for a short time without sales or profits, without cash it will die. For this reason the inflow and outflow of cash need careful monitoring and management.
Forecast and cashflow information can be an invaluable business tool if it is used effectively. Not only does the Corporate Services team at Abercrombie Gemmell have valuable experience in the preparation of forecast and cashflow information, we are also able to provide a dynamic and regular review process to update forecasts for actual information obtained from management accounts and incorporate changes in business activity, payment patterns and supplier demands.
Regular review of your forecast and cashflow information may also enable us to:
- identify when problems are likely to occur and sort them out in advance
- identify any potential cash shortfalls and advise on appropriate action
- identify whether you have sufficient cashflow before you take on any major financial commitment
- focus on future tax planning opportunities
- tailor cash extraction to the principals
- monitor ongoing compliance with bank covenants