When I come back to work after the summer break, I spend the first week or two planning for the next financial year. I like to get a head start on it when I’ve been out of the nitty gritty of day-to-day stuff and when we’re not so busy with clients’ work.
It’s important to plan what you want the business to achieve, then look at what it has done in the past and work out how you’re going to bridge that gap.
The financial aspect of a plan is a budget. And because cash is king, the even more useful version of this is a cash-flow forecast.
It’s not unusual for a client to ask us to prepare one for them because the bank has asked for one. It then gets handed to the bank or put in a drawer and promptly forgotten. That’s about as useful to the business owner as an annual set of financial statements we prepare long after the year end to calculate the tax payments!
But a budget and cash-flow forecast can be very useful to help manage the business. Read More »