Cash flow forecasting should be an integral part of our business planning process.

It is vital to monitor actual performance against budget and calculate key performance indicators such as:

  • Length of order book
  • Sales compared with budget or last year
  • Profit margins
  • Stock levels and stock turnover
  • Debtor days and overdue collections.

We have noted 7 bad practices that every business needs to avoid:

  1. Taking on financial commitments before you can afford to pay for them.
  2. Undertaking large amounts of speculative work in the hope of making a sale.
  3. Overstating stock, WIP or fixed assets in your management accounts.
  4. Not planning for major expenses you know will arise. .
  5. Failing to prepare cash flow forecasts, particularly in today’s difficult market.
  6. Failing to agree all the details of an order, leading to a customer dispute.
  7. Poor credit control system, starting with credit checks before taking the order.

How do you score on these 7 bad practices?

Please telephone your main contact at Crowthers if you would like to discuss how we can help you to improve your business systems.