Cashflow Planning
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Why cashflow forecasts are important

Understanding cash is the key to your business survival. It is like understanding how much gas you have left in your car tank. Cashflow is king and cashflow effects is impacted by everything you do - from paying bills to buying assets or funding the next round of growth. Successful business owners understand how cash flows through their business and how to ensure they can always meet commitments of debt, creditors, growth and working capital.

Before you start

A cashflow projection helps you understand how much money will be coming in and out of your business and when.Once you understand this, you can understand what cash you have available to manage any timing differences of the ups and downs. Before you start,

  • Obtain the information of your normal month to month income and expenses,
  • Think about the length of the forecast, i.e. one year, 3 years etc.
  • Review your accounting software reports from historical data to ensure you don't miss expenses
  • Forecast in any growth of the business, i.e. new staff, new marketing spend, asset purchase
  • Factor in GST, TIP - complete your cashflow GST Exclusive to keep your projection simple

Cashflow Tips & Tricks

Whilst completing your cashflow projection, you might like to consider some of the tips and tricks we discuss with our clients that can help them improve their cashflow or at least change it.

  • What payment terms do you offer customers and can you change these?

  • Can I speed up money collection via better processes and technology?

  • Do I follow up with unpaid invoices?

  • What terms do my suppliers have of me? Can I negotiate any of these?

  • Does the payment to my suppliers have the same timing as the funding of these purchases? I.e. can you consider using a finance option to fund stock purchases before the eventual sale.

  • Have I recently reviewed historical costs to ensure they still serve the business?

  • Do I understand my fixed and variable costs?

  • Can any of these fixed or variable costs be eliminated, delayed or reduced? 
  • What exposure do I have to a down-turn or to one major customer?
  • Am I building a 'rainy day' account?
  • Do I separate out tax from our every day business account?

Scenario Planning

Understanding when your cashflow peaks and troughs are is helpful when planning and avoiding going bust.

Once you have built your cashflow, use it as a baseline to then complete some scenario planning based on things like; down-turn, major growth, small growth etc. You know your business environment and what is possible so forecast on these situations.

You can use these scenarios when talking with the bank or any stakeholders. They might want you to compare you forecasts to your actual numbers in the future or historically. The important thing here is that you can adjust during the year when things aren't working too well as you have visibility of your cashflow.

Your cashflow figures should be the output of the work you do or you will do. I.e. cash if the result of all other things you do in your business. Ensure you are working toward your strategic plan.


You've finished your cashflow, now what? Well reviewing it regularly is the piece everyone forgets so set a reminder in your calendar to do this at least monthly.


If you identify a cash shortfall, then it might be time to call your accountant or your bank. Get the ball rolling about what solutions are available. Please know that there are always solutions and the more proactive you are, the more favourable your discussion with a bank will be. Before you make this call, write down your 'assumptions'. Assumptions are the decisions you've made when creating the cashflow, so your thoughts and methodology behind your numbers. Think to about what you see the future of your business environment and note this down. If the bank respond to you to ask for additional information, you want to ensure that you are prepared to answer their questions and explain the business plan you are working to.