Cash Flow Management and Budgeting

Cash is the lifeblood of most businesses. Cash flow forecasting helps you to run your business smoothly, avoiding many of the pitfalls that can cause a business to go out of business!

Developing effective cash flow forecasting will map out where your money is coming in and where it is going out. It is integral to provide an overview of how your business is performing. You can chart actual growth as well as identify, and plan for, future growth. It shows you how much money you make, how much you spend, and hopefully, how much is left over, your net profit.

As a small business itself, XYZ Accounting knows how important cash flow analysis is for your business. Using Xero’s integrated software, with all your financial data on hand, makes generating reports and managing cash flow easy.


Cash moves in and out of a business in three ways:

1. Operations (by making sales, or by purchasing supplies)
2. Financing (by taking out new loans or by repaying existing ones)
3. Investing (by selling or purchasing assets)

With an effective cash flow forecast, you can:

  • Check that you have enough cash to pay your staff and suppliers, and cover operating expenses
  • Anticipate shortfalls in cash and either plan your operations accordingly by cutting back on expenses or arranging finance to cover these shortfalls
  •  forward planning to identify what time of the year things may be slow, thereby putting money aside to cover that period
  • Identifying which parts of the business are performing well, and which aren’t
  • Determine your borrowing needs and plan for capital investment
  • Monitor morning owing (receivables) and money owed (payables) and managing stock to make the best use of your available cash
  • Plan investment strategies to ensure that you can earn the best possible return on spare cash
  • Proving a transparent picture of your business to avoid nasty surprises of some of the less regular costs


Tips for improving your cash flow:

  • keep track of your debtors – be aware of which customers have a tendency to be late or overdue with their payments
  • invoice customers as soon as a job is complete, don’t wait weeks before sending out an invoice
  • regularly review your invoices, making sure that credit terms and payment details on your invoices are correct and up to date.
  • if possible, put direct debit facilities in place for automatic drawdown of fixed fee contracts


How It Works

To get the most out of your cash flow forecast, XYZ Accounting will complete regular updates, and take everything into consideration, no matter how small or big a payment or contract may be.

XYZ Accounting will produce the most appropriate forecasting period for your business, be it weekly, fortnightly, or monthly. This gives you the necessary detailed information to ensure there won’t be any “mid-period” cash flow hiccups that have been overlooked.