A lot of businesses are getting great at sorting their short term cash flow, but I see so many who haven't put any thought to the future.
That's where the King of Cashflow comes in! I've got a plan that'll get you predicting the future and dodging all manner of cash flow crisis.
Know your horizons
It's best to have three time horizons for projections, each with their own aims.
Week to week, you've got to know where you're cash is and what you'll be investing it in. Short term planning will let you buy your stock and pay your suppliers without running dry.
This is the difficult one. When thinking by the month, aim to know exactly how much cash you'll need to hand to stay out of trouble. Once you have that figure, note where all your cash is coming from and make sure what you're going to have exceeds what you'll need.
When making your predictions, think about the times of year that are likely to put unusual strains on your cash flow. Is your business seasonal in any way? Be prepaid for a drop in cashflow, especially if you might end up needing a loan.
Not even the King of Cashflow knows exactly what's going to happen in 2015, but that doesn't mean I don't plan. Have cash flow goals and plan for them, because even if your predications end up being way off, you'll be more prepared than if you've never considered the options.
With these three time scales in mind, you'll avoid any unwelcome surprises.
Prepare for the best
When your business is growing, it's all too easy to be caught unaware by sharp cost increases, so it's important to factor in some growth to your monthly and yearly predictions.
Create a spreadsheet and test out what position you'll be in if your orders unexpectedly rise by 25, 50 or even 100%.
In the same way, break down your costs as much as possible. Make sure increases to individual bills, employee costs or taxes won't cripple you.
If any of this rings alarms bells, don't wait around to until it happens, act now!
It could be as simple as keeping separate cash piles for these emergencies, or you could ask for invoices to be paid earlier in months when things are looking tight. However you do it, be prepared for the future!