A Cash Flow Forecast


Ensure You Have A Cash Flow Forecast That Will Give You Foresight!

Cash Flow Forecast

Why is a Cash Flow Forecast so important? If you’re in business, you have experienced some sort of cash flow issue before. Either currently or in the past.

Most small business owners don’t understand that their cash flow is made up of 5 cycles. Thats why a Cash Flow Forecast is important.

5 Cash Flow Cycles

The five cycles are as follows:

  1. Sell
  2. Create
  3. Deliver
  4. Invoice
  5. Get Paid

Your Cash Flow Cycle may not be exactly like this, you may have a different order. However these five cycles are all usually measured in days.

The Next Step

The next step is to work out what the dollar value is of each Cash Flow Cycle day.

To do this, you simply divide your total annual sales by 365 days in a standard year.

For example, if your business turned over $500,000, then every cash flow day is valued at $1,369.

Imagine your business took in total 50 days.

  • 5 days to Sell,
  • 9 days to Create,
  • 4 days to Deliver,
  • 2 days to Invoice
  • 30 days Collect the Cash.

Then this would cost your business $68,450 ($1,369 x 50 days) in cash flow.

This formula is great because it allows you to improve and develop your processes. Your cash flow cycle will be quicker and more efficient. Thus allowing your business to receive cash for the value it delivers to customers more effectively.

You could decrease the amount of cashflow cycle days from 50 to 30. Then your cash flow would improve by $27,380.

What This Means For A Conqa Client

That means your business has received an additional $27,380 in the bank that you can –

  • Reinvest back into your business;
  • Deposit into your Treasure Chest Account;
  • Build an ‘Expense Safety Buffer’ (cash in the bank, worth 3 months of expenses);
  • Pay down your debts;
  • Sleep better at night!

As a Conqa client, we work closely with you in your small business accounting to reduce your cash flow days. We do this by helping improve your internal systems and business processes. And by introducing you to new and advanced technologies and ideas. The result is more cash in your bank account and thus, more options for you and your business!

As a Conqa client, we work closely with you in your small business accounting to reduce your cash flow days. We do this by helping improve your internal systems and business processes. And by introducing you to new and advanced technologies and ideas.

The result is more cash in your bank account and thus, more options for you and your business!

Call me to Talk about what Conqa can do for my business

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