One of my roles in a previous life was the creation of complex financial model for the purposes of multimillion pound merger and acquisition transactions.

To create a financial model takes a particular set of technical skills, together with experience in putting them together.

It is also essential in preparing a business plan

One of the most common causes of business failures (other than pure incompetence) is what is known as overtrading – growing so fast that you run out of cash in the process.

Cash is the life-blood of a business. Without a good idea of what your cash-flows in the near, mid and long term are going to be you run a very grave risk of running out of cash before you even know it.

The solution to this is more complex than it used to be. Historically the solution was to dip into the business overdraft that was readily available. Not so any more!

Unfortunately the banks are not as reliable as they once were and overdrafts not so readily available.

A cashflow forecast can serve two issues:

1. It can prevent you from running out of cash as you can predict the cashflows more accurately
2. It can demonstrate to the bank that you are managing your business well and are therefore a good credit risk

Profit is not the same as cash – a business can make a profit but not have any short-term cash available.

Profit is when a customer buys your product or service for more than it costs you to provide it. That makes you profitable. However, until they actually pay for it, you don’t have a cash inflow. This means that even a profitable business can run into trouble if the cash dries up.

In order to be able to manage growth having a cash-flow forecast is vital.

To find out more please get in contact or get a quote here