Financial forecasts assist in managing your business finances. They are future predictions of your business finances, as compared to historical financial statements (which only provide details of actual results of progress which are often 12 months old). Without forecasts there is no way you can foresee profit or cashflow problems on the horizon.
Here are 5 simple ways that forecasting can help your business:
Focus on the Future – by forecasting on a regular basis, it forces you to continually think about your future and where your business is headed. This will allow you to foresee changing market trends and stay ahead of your competition.
Customer Satisfaction – keep your customers satisfied by providing them with the product they want and when they want it. The advantage of forecasting in your business will help predict product demand so that enough product (or staffing) is available to fulfill customer orders particularly if demand is seasonal.
Credit – If you expect to apply for a loan or line of credit, your financial institution will likely ask you to provide them with forecasting reports with your submission.
Cash Flow – forecasting can give you the intelligence to anticipate a downturn in sales and plan for it. Likewise, it can alert you to periods when you can expect an increase in sales and you can organise additional staffing and working capital ahead of time.
Progress Towards Goals – if you can’t measure it, you can’t improve it. Setting goals alongside your business forecast allows you to track your progress and plan your operations that are aligned to what you want to achieve.
If you have any questions or would like to know more about how we can help you with your business forecasting please do not hesitate to contact us.
Kreston Stanley Williamson Team
*Correct as of May 2018
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.