Just 27% of Businesses have this...(Do you?)

12th August 2020

What day of the month does your mortgage payment leave your bank account?

Don’t worry, I’m not expecting you to write back and tell me.

But bear with me a second.

I’m pretty sure that you knew the answer to that question.

It’s just as likely that you know what day of the month you pay yourself. (Most people know that!)

And if I asked when your electricity bill or gas bill is paid, you’d probably be able to give me at least a rough idea.

So, in your private life, you have quite a good handle of how much money to expect in your account over the next few weeks…

…When your account is relatively full, and when it’s relatively empty.

You’d never buy a car, for example, if that meant that you’d have no money for food next month – because you’d understand the financial implications of that big purchase.

In short, you have a relatively clear idea of your own cashflow.

The shocking thing, though, is that most company owners really don’t understand the cashflow of their own businesses.

A recent survey of more than 15,000 companies showed that just 27% have a written cashflow forecast.

Now, that would be horrific in normal times, because let’s consider for a moment what this means…

These companies might not know exactly when their bills are due (ie when money will leave their account)…

They might not have a clear picture of when clients are due to pay them…

And most importantly, even if this information is recorded somewhere systematically, no one’s pulling it all together to figure out how their cash situation is ebbing and flowing over time.

So – for example – they have no way to see at a glance whether there’s any point in the next couple of months where they might be running dangerously low on money (even if their order book is full)…

Or whether at the end of September they’ll have enough money to hire another staff member, as planned…

They’re winging it financially!

I mean, imagine having to decide in your personal life whether to commit to a big payment in October, with only the vaguest idea of what your financial situation will be in two months’ time.

You wouldn’t do it, would you?

But that’s exactly how businesses across the country are operating.

And what makes this even worse is that this survey, which was conducted by the Association of Chartered Certified Accountants and The Corporate Finance Network, is recent – from mid-July.

That means that companies are still routinely operating without a cashflow forecast right now, as we grapple with the aftermath of the lockdown and enter one of the country’s very worst economic crises.

In this economic environment, understanding your cashflow isn’t just a ‘must’.

It could easily be do-or-die.

After all, if you have no idea how much money you’re going to have in the bank next week, next month and in October, how can you possibly plan ahead…

Make sensible decisions about your company’s future…

Or even sleep at night!? (I wouldn’t be able to.)

I look at it this way.

You manage most resources in your business pretty strictly…

Depending on what you’re offering, you’d never run out of boxes to pack your product in… or raw materials… right?

You’d keep close tabs on what you have in stock, what demand is likely to be like next month and how much you’re going to need to satisfy that…

You run the forecasts.

Your cash is just another resource you have to do that for.

Well, I say it’s “just” another one. Of course it’s the most important one, because not only does cash power your business - it is the one thing you literally cannot afford to run out of. The moment there is no more money left, your business is finished!

So don’t neglect it.

Your business needs a cashflow forecast, now more than ever. If your accountant isn’t doing this for you, it’s time to upgrade your financial management.

We update our clients’ cashflow forecasts every single day.

You will never have to wonder whether you can afford to make a particular purchase next month or what the right time is to invest in a certain part of your business, because we’ll always have the data right there.

And if there is even a hint of trouble with your cashflow, we’ll see it coming, far ahead – and help you get it under control. (That’s cashflow management, which is really its own email…).

Just imagine how much more confidently you could run your business with that kind of financial control and oversight.

And how reassuring it would be to have that kind of partner on your side, during these troubled times.

To find out more about how we can help you, get in touch with me today.

Warm regards,


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