Helping our clients with Short-term Cashflow Reporting

male sitting at cafe table looking at laptop with hand over mouth concerned.

If you want to know your cash balances on a short-term basis – weekly, fortnightly, or monthly – then short-term cashflow reporting will help you.

This is the method that our bookkeepers have been using to provide precise cashflow forecasts to business owners, wanting to know how much cash their business is going to have in one week, or one month up to 3 months.

Fundamentally, it’s about having information to give you time and money to make the right business decisions.

You’ll get visibility of your future cash position which will highlight when things are going to be tight. This will allow you to take action to get through any tough times.

You’ll also be able to see a clear picture of how much money you’ll have in a given week and how much you can afford to pay out.

In Xero, the short-term cash flow projection dashboard forecasts the amount of cash your business will have in the next 7 or 30 days. You can choose which bank accounts to include in the projection.

 

How these forecasts can help you:

  • avoid financial trouble
  • plan for future cash shortcomings
  • meet your tax obligations
  • plan asset purchases
  • plan for growth or expansion
  • make an informed decision on whether borrowing is right for you
  • benchmark your performance
  • test different strategic scenarios
  • figure out the best time to invoice
  • build your case for investment
  • forecast the cost of taking on more employees.

 

If you’re going to do this, you’ll need to be upfront and honest. Some common mistakes include:

  • Being overly optimistic when you’re predicting future income — to have any real merit, your predictions need to be honest and backed up by data.
  • Not documenting your current financial activities — your past income and expenditures will help you accurately predict your future cash flow.

Remember, a cash flow forecast is only as valuable as the information and detail put into it. You can do this yourself, or our bookkeepers are happy to help.

A short-term cashflow forecast can give you a detailed view of how much money you have and therefore how much time you have to fix any liquidity problems that may arise.

If this is something you’d like for your business, speak to your Red Office Bookkeeper or Account Manager to discuss further.

Further Reading: 3 areas to help with cashflow from one of our senior bookkeeper’s.