Now that businesses are starting to re-open, long-term cash flow forecasting is crucial to your business going forward to ensure you thrive and can weather any storm – cash flow is a powerful decision tool and is what will see you through the new ‘normal’.

In today’s ‘normal’, a business owner that focuses on profit and ignores cash flow is at higher risk of failure – by calculating your projected cash flow, you can ensure your business continues to thrive post lockdown.

In these uncertain times, accurate and timely cash flow projections are extremely important to business owners as:

  • it gives your business the boost it needs to accelerate growth;
  • you can ensure suppliers and employees are paid on time;
  • a cash flow projection can help identify the need for external funding well in advance;
  • if you have an accurate cash flow projection, you are more likely to impress banks, investors and other external stakeholders.

With a cash flow projection you can:

  • Manage and predict future cash flow requirements instead of looking backwards at historic information. Compare your income and expenses so you can identify which areas of your business you need to focus time and effort on.
  • Budget for equipment purchases or identify the need for a business loan.
  • Predict the effects of planned business changes such as the costs of hiring new staff, winning new contracts and planned price increases.
  • Ensure your business can weather the storm of a pandemic.

Most businesses are likely to have fixed and variable costs, which will need to be included in the cash flow projection:

  • Fixed costs – these are costs that do not fluctuate with changes in production activity or sales volume such as rent, salaries and overheads.
  • Variable costs – these are costs that change in proportion to sales or production output such as purchases of goods and carriage.

A cash flow projection is a very useful business planning tool which enables you to predict how much cash you will have in the future – you will also have the historical data to back up and inform any future business decisions.

Please Note: If you have chosen to defer payment of VAT due to the coronavirus, you must pay this on or before 31 March 2021 – it is important that this is factored into your cash flow forecast to ensure you have the funds in place.

You also need to include any CBILS or Bounce Back loans, as repayment of these loans plus interest are due after 12 months. You will have to make full repayment up to the six year term, depending on the arrangement you have with your lender.

With our dedicated business advisory services, we can help you create a sustainable and scalable cash flow projection to ensure your business stays afloat post lockdown.

For one-to-one expert advice, please contact Lee Sugden on 0161 761 5231 or email