How to Do a Cash Flow Forecast

Poor cash flow is one of the biggest contributors to small business failure. To beat the odds and succeed in business, it pays to conduct regular cash flow forecasts. Here’s what it should include.

  1. What is your anticipated income?

This figure is an estimate of what you expect to bring in from sales.

Make sure you:

  1. Use sales data from a comparable period (e.g. use June 2019 figures for June 2020 forecast) as a guide
  2. Take into account seasonality or one-off events (e.g. conventions)
  3. Factor in current market issues (e.g. a recession or a pandemic)
  4. Monitor your competition. If a new competitor is taking some of your regular clientele, you may need to factor in lost market share

 2. What are your other cash inflows?

Depending on your business, sales won’t be the only contributor to company profits.

Cash inflows can include: 

  1. Government grants 
  2. Proceeds from insurance 
  3. Tax refunds
  4. GST rebates
  5. Funds from asset divestment 

3. When will you receive payments?

This will differ from industry to industry – a retail business will have vastly different payment terms from an IT company. If you have 30-day terms, you may expect to receive payments one month after invoicing or later.

4. What are your expenses? 

Both direct and indirect expenses should be factored into this figure. Make sure you also take into account the timing of each payment, as you probably won’t pay all outgoings on the same day.

Expenses may include: 

  1. Employee wages and super
  2. Payments to suppliers
  3. New assets
  4. Overhead (ie. rent, utilities, office supplies
  5. Insurance
  6. Repairs and Maintenance
  7. Franchise fees

5. WHAT IF?

Most businesses are in a constant state of flux. Even if your cash flow remains steady for several months, an unexpected event can affect your best-laid plans. So include ‘what-if’ scenarios in your forecasting.

What if scenarios may include:

  1. Loss of key staff
  2. Rent increase
  3. Recession
  4. Damage to your physical business (ie. flood, fire, etc) 
  5. Damage to your brand (e.g. poor reviews)
  6. Sudden shutdown of brick-and-mortar businesses (e.g. COVID-19)

With Opulent Accountants, not only will you have a professional bookkeeper look after your accounts, you will receive regular, simple-to-understand business reports giving you a better insight into how well your business is performing.In addition, all clients have access to our cash-flow strategies to make their business more profitable.

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Moumita Ghosh
Moumita Ghosh
2020-11-18
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We've been meeting Dayan for years now and he is great with his advice and is very knowledgeable and pragmatic. We recently used his services to get the home loan for our house and he and his team went above and beyond to get us the best possible deal. Ishara in his team was super communicative and responsive in following through and made the process very easy for us. Highly recommend them!
Cara Neela
Cara Neela
2020-10-24
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Dayan and Hasi are wonderful, wouldn’t hesitate to recommend them! They went through all with a fine tooth comb to ensure all was correct. Thanks to you both and the Opulent team!
Jason Barry
Jason Barry
2020-09-29
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I was looking for a different accountant and was recommended to Opulent Accountants. I have been blown away with there service. I wish I moved accountant sooner. Platinum Plumbing Enterprises P/L
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Afshin Koohestani
2020-09-10
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Uditha Illeperuma
2020-09-08
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Opulent Finance gave professional advice for my unique home loan requirement. They respond quickly with the proper information. The process was smooth and I felt comfortable to deal with the team. The team is friendly and professional to deal with. Highly recommended for any one looking for finance.
Dinesh Fernando
Dinesh Fernando
2020-09-03
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Very happy with the service provided in getting my tax returns done. Mr. Dayan is very helpful and professional and has extensive knowledge in his field of expertise. Highly recommend if you are looking for a hassle free and prompt service.
Ronald Turner
Ronald Turner
2020-07-16
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Opulent were absolutely fantastic to deal with, they are competitively priced and incredibly proactive and friendly. For me I have been much better off using their fantastic services as opposed to doing tax returns myself. Sum was amazing, incredibly knowledgable and super friendlyI'll certainly be back with Opulent next year
Milinda Wickramasinghe
Milinda Wickramasinghe
2020-07-05
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Opulent team has been fantastic and it has been truly a pleasure dealing with the team for more than 10 years. Dayan and Ishara have gone above and beyond to assist and communicated with me even when I was overseas. Excellent service has being provided in a professional and timely manner. I would highly recommend the team.
Chami Ranaweera
Chami Ranaweera
2020-04-28
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I have been working with Dayan last 9 years. All of my loans, refinance and tax are done through Opulent.Dayan and his team including Ishara are very helpful and easy to deal.
Edmund Lobo
Edmund Lobo
2019-12-02
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We were new entrants to the cattle farming scene. All the rules and regulations surrounding primary production can be very confusing. The team at Opulent Accountants walked us through all the steps, set up the necessary ABNs and Company / Trust accounts, filed the related pending BAS and Tax returns, and is currently keeping us up-to-date with all ATO related transactions. We recommend them highly to all.