It’s often better to start small and build up, keeping your assets and premises in line with the size of your business. It may also be worth reviewing your payment terms and renegotiating them if necessary. Make sure you know your legal rights with respect to unpaid debts.Īnd if you’re in the habit of paying your own bills early, you could consider simply paying them on time instead. If debtors are chronically late, you need to work out a way with them to recover your money – and you may wish to evaluate if you still want to keep doing business with them. Keep on top of monies due and remind your debtors to pay if they have delayed. It will alert you to upcoming demands on your cash flow before they become an issue.Īnd as always, some expert guidance from your accountant can be really useful, to help get and keep your cash flow budget on track. You need to review this spreadsheet regularly. Plan for different outcomes, including best case versus worst case scenarios, and gauge what the effect on your cash will be. To estimate next year’s cash flow, consider factors such as last year’s profit and loss statement – and factor in forecasted costs and income such as large one-off sales, and the delivery of expensive capital and business needs such as those required for growth. It should also seek to project your position in the future. It needs to detail when you receive payments for your sales, and when you are planning to pay your own bills – remembering that a sale is not a sale until you collect the money. Your cash flow budget should reflect, month-by-month, what the actual money movements are in your accounts. It should reflect real cash flows – therefore it needs to be live and up to date. Your cash flow budget is different to any profit and loss projections you have in your business plan.
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