A Cash Flow forecast for any business is super critical and especially so for a small business.
But in times of uncertainty like we’re going through right now, it’s easy to let your Cash Flow statement lull you into a false sense of security.
So be careful.
The reality is, in times of uncertainty, you simply can not be certain of when your cash will come in or when your business will pick up again, requiring more cash flowing out for stock and supplies.
At times like this, businesses will often just take their current month’s figures and then extrapolate that over a period of 6 or 12 months.
The problem comes is your current month’s figures represent a peak period – which, by the way, you may not even know yet – then extrapolating these figures might leave you short of cash inflows in a few months as the business drops off again.
So, YES, please do a Cash Flow. And review it every month.
But just be aware that we’re living in uncertain times and so your position may change at any time.
#cashflow #forecasting #uncertaintimes