Proper cash flow and budgeting are essential for a business to grow sustainably. The problem is it takes time and expertise to do it right. If you want the benefits of budgeting and forecasting without the stress and effort, let’s talk!
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Cash flow and budgets are the core of any business’s operations and finances. It isn’t something you opt into – your income and outgoings will happen even if they aren’t tracked. But, for growing companies, a reliable cash flow and budget may be the difference between success and failure. Every business should be doing this.
Around 80 % of UK SMEs experienced a cash flow crisis in the last 12 months, with rising costs and late payments cited as top causes.
Unfortunately, getting it right can be time consuming, and expertise is required to turn your numbers into real strategies.
So why should you be investing in more advanced cash flow and budgeting?
Budgeting is essential for financial oversight, enabling the tracking of income and expenses to ensure spending aligns with projections. It gives you a framework for informed decision-making, highlighting areas of overspending or potential savings.
Many UK small businesses report cash flow problems, with almost half citing challenges due to late payments and rising costs.
Gravitate will help ensure you have the fundamentals down, with daily/weekly cash flow tracking, integrated financial reporting and regular check ins with you or your finance team to ensure everything is on track.
Cash flow forecasting will enable you to make accurate predictions on the future shape of your finances, enabling you to anticipate shortfalls, reduce risk, plan for growth and tackle issues before they become problems.
We will closely monitor and analyse your financial data, revealing important trends and opportunities to boost revenue or cut waste. We provide predictions and strategic models tailored to your business needs. By creating a detailed forecast, we can create a model to enable informed decision-making for sustainable growth.
Using the best cloud accounting software in the industry, we can submit VAT returns direct to HMRC and records are held securely on the system, readily accessible should any questions be asked.
We will set you up with the latest accounting technologies, reducing or eliminating your reliance on paper for bookkeeping. We can also help identify other inefficiencies or wastage throughout the business. Digital records also eliminate the need to store paper records for years!
Cash flow forecasting is a process where you estimate the inflows (money coming in) and cash outflows (money going out) of your business over a specific period. It is helpful when trying to predict future cash balances and identify potential cash shortages or surpluses, whilst also projecting the company’s profit, loss and balance.
Cash inflows: This includes sales revenue and receipts, loans and investments, asset sales and other types of income.
Cash outflows: This includes payments to suppliers, payroll, expenses, rent, loan repayments, taxes and capital expenditures.
How regularly a cash flow forecast is updated depends on the needs of each business. For example, rapidly growing businesses with more volatile cash flow may need weekly forecast updates, while more established businesses may only need to update them monthly. Of course, the more information you can get, the better!
Your business budget is a financial plan outlining anticipated revenue and expenses for a specific period (usually a year). This is your roadmap for managing your finances, controlling spending and tracking performance versus spend.
Budgets and cash flow are closely linked. The budget outlines planned revenues and expenses, which are then used to project cash inflows and outflows. The cash budget is a direct part of the overall budgeting process.
Budgeting is the process of planning for future revenue and expenses, while a forecast attempts to predict what will actually happen in the future based on trends and assumptions.
A cash flow projection is another term for cash flow forecast. They are essentially the same thing – a prediction of how much cash will move into and out of a business over a specific period
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