Cash Flow Plan
Cash Flow Plan
What is a cash flow plan?
A cash flow plan is your most vital and powerful financial tool. It shows revenue coming into your business that projects income and the expenses necessary to operate your business for a rolling period, i.e. week, month, quarter or financial year.
The rolling "thirteen-week" (13 cash flow) is a standard in our industry.
The Cash Flow Plan Includes:
- Projected starting account balance
- Predicted income
- Estimated expenses - bills, salaries, raw materials
- Projected ending account balance
- Separation of normal course form extraordinary expenses allows a priority of cash uses to improve the outlook
A cash flow plan is only as valuable as the information and detail put into it and should be re-examined and adjusted throughout the week as circumstances, market conditions, etc. fluctuate. Longer forecasts help plan strategic activities and highlight the need to increase sales/funding and decrease spending or capital for growth in advance.
Why use a 13 week cash flow?
- Plan for future shortcomings
- Benchmark future asset purchases
- Plan for growth or expansion
- Make appropriate borrowing decisions
- Track your cash performance in real-time
- Redefine your accounts payable strategies
- Reassess payroll and headcount
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