There are so many aspects of good cash management for an Agency meaning it can be easy for some to be missed or undervalued. 

One key tool, that has historically taken a back seat, is cash flow forecasting. However, in the wake of the pandemic and amidst the current economic climate we’ve noted a shift, with more & more clients recognising the value of cashflow forecasting. 

What is cash flow forecasting?

Cashflow forecasting is a way of picturing your business’s future incoming and outgoing payments based on your previous spending and knowledge of what you know is coming. It’s your business’s financial roadmap to help avoid cash crunches and plan payments so that your cash keeps flowing smoothly.

What are the benefits of cash flow forecasting?

Cashflow forecasting provides valuable insights; offering greater control and a comprehensive overview of your business’ finances. This has proven to be an absolute game-changer for our clients, allowing them to get ahead in managing their finances, rather than just reacting to challenges as they occur.

It is important to note that cashflow issues can happen to any business and are not necessarily indicative of a struggling business. Various factors can contribute to cashflow woes, including; delayed client payments, stringent credit terms from new suppliers and/or needing to make upfront payments for projects. The absence of proactive planning for these potential challenges can lead to considerable stress. 

However, by monitoring and forecasting your cash flow, you can anticipate and navigate these potential pinch points. 

One option for dealing with these periods of cash flow stress is seeking external funding. Engaging a lender early makes it much easier to secure funding, as they are more likely to provide funding at favourable rates when your business’s financial standing is strong. This proactive approach not only eliminates the stress of scrambling for funds later but also results in significant savings in terms of interest payments. 

Cashflow forecasting also allows you to identify when surplus resources are available for strategic investment and when it may be more prudent to conserve resources for an upcoming pinch point. 

In Conclusion

The improved level of financial visibility gained from good cashflow forecasting enables you to make smarter decision-making. This includes more effective use of your resources at the right time, decreasing your stress and improving your business’s financial stability.