Cash is the oxygen that enables a business to survive, grow and prosper, and is the primary indicator of business health and well-being. While a business can survive for a short time without sales or profits, without cash it will die and die surprisingly quickly. For this reason it is vital that the inflow and outflow of cash is carefully monitored and managed.
At one point or another, most enterprises will need to raise finance: whether to start-up a business, fund expansion or enhance business cash flow. The effective management of finance can make a big difference to the profitability of your business - obtaining finance wisely and tax efficiently can reward your business.
Badly planned, inappropriate finance can become a burden. Duddon & Co Accountants can advise on which Barrow in Furness or Cumbria bank best suits yoru needs and how to apply for grant funding through Furness Enterprise, based in Barrow.
Whatever the reason, if you are looking for assistance with cash flow Duddon & Co Accountants can help. We can offer support and guidance to ensure you take the road to success.
We can prepare Cash Flow Forecasts and Business Plans on your behalf. When we have prepared the figures we can help you decide what is the most advantageous finance for you eg business loan , overdraft or you may even qualify for grants. Our knowledge of the grants and finance available in Barrow in Furness and wider area will place you in a position od advantage over your competition.
Why ?
Why bother with cash flow statements? Because the Profit and Loss shows profitability and the balance sheet shows asset strength. While these two financial statements give a great deal of information on the progress of a business during an accounting period, profit does not equal cash, and strength in assets does not necessarily mean a large bank balance.
A Business which fails to make profits will go under in the long term. However, a business which runs out of cash because it does not measure the movement of it's cash, even for a couple of months will fail, despite the fact that it is profitable..
Cash flow statements forecast that sufficient funds will be available when they are need to sustain the activities of a business.
Cash-flow forecasts can provide an early warning of liquidity problems, by predicting how much actual cash is required, when the cash is required, how long the cash will be required for.
An enterprise must know when it might need to borrow and for how long, not just what amount of borrowing or funding will be required.
Banks have increasingly insisted that customers provide cash flow forecasts as a precondition of lending. A newly established business wishing to open a bank account will often be asked to provide a business plan. The cash and sales forecasts will also allow the bank to monitor the progress of a new business, and so control its lending more effectively. This doesn't just apply to large companies trading in teh cities. We have had to provide countless cash flow forecasts to aid lending decisions by banks in Barrow in Furness.
Duddon & Co Accountants will prepare cash flow forecasts in the correct formats that the banks require, by dealing with local banks and using there specific software. We can also provide monthly statements in conjunction with your monthly book-keeping requirements. Keeping on top of cash flow is a must.
BUDGETING
A budget is a financial plan for a business, prepared in advance.
In any business the budget will provide the mechanism by which the objectives of the business can be achieved. In this way it form a link between the current position of a business and the position that the business is aiming for. By using a budget firstly to plan and then to monitor your business, you can ensure that your business's progress is co-ordinated to achieve the objectives of the business's. The benefits and purposes of using budgets are as follows:
The Budget compels planning- by formalising agreed objectives of the business you can ensure that your plans are achievable. You will be able to decide what resources are required to produce the desired outputs, and make sure that they will be available at the right time.
The Budget communicates and co-ordinates- Because a budget is agreed by a company, all the relevant employees will be working towards the same ends. During the budget setting process any problems should be resolved and any areas of potential confusion clarified.
The Budget can be used to monitor and control - An important reason for producing a budget is that management is able to monitor the actual results against the budget. This is so that action can be taken to modify the operation of the business as time passes, or possibly to change the budget if it becomes unachievable.
The budget can be used to motivate - A budget can be part of the business techniques for motivating managers and other staff. |