- Description
- Specifications
A budget will show the expected income and expenditure for the business and the emerging profit. You can calculate various "what-if" scenarios to factor in potential changed circumstances e.g. higher interest rates; higher fuel costs and if you are an exporter or importer, changes in currency conversion rates.
Budgeting lets you disclose problems in advance. If the budget you've prepared doesn't provide you with an adequate profit, then you can decide on appropriate action to take to try to achieve your desired profit, rather than waiting for the events to unfold.
When the budgets are completed, it is then possible to prepare a cashflow forecast. This will reflect the figures contained within the budget as well as taxation commitments; loan repayments; dividends or drawings; capital expenditure; receipts from debtors and payments to creditors.
It is recommended that every business should prepare a budget and cashflow forecast for the next 12 months. If the cashflow forecast highlights that you might need an injection of extra funding, now is the time to talk to your bank/finance company or debtors' financing company or consider trying to raise capital - not later in the financial year when you have a problem!
This paper is presented under the following headings:
- Do You Have A Cashflow Strategy?
- Cashflow Forecasts And Budgets Are Important
- Cashflow Management
- Cashflow Forecasts - Short Term
- Customers Mismanagement Can Cause Cashflow Problems
- Debtors' Management Helps Cashflow
- Factoring Can Help Cashflow
- Work in Progress Reduction Helps Cashflow
- Stock Inventory Reduction Helps Cashflow
- Suppliers Can Help Cashflow
- Budgets Give Businesses A Better Chance Of Success
- Exporters - Buying Exchange Cover Can Help Cashflow
- Cost Control
- Capital Expenditure
- Bank Lenders - Communication Is Vital If You Have Borrowed Money
- Capital Raising To Bolster Cashflow
- Avoiding Problems With Cashflow