Forecasting for growth
Growth creates a lot of uncertainty over cash flow. Forecasting will help you to test the adequacy of the finance arrangements you have in place and to pre-empt / navigate any cash strain. Forecast flexibility is needed so that you can react to the inevitable variances from your first plan.
| | Cash detail | Sales Flexing | Software from | Set-up |
|---|
| foreCASH | Monthly, weekly and daily drill down | Yes | from £35 pcm or £495 | £40 pcm or £950 |
| Excel | User defined | - | - | New £1,650 for 3 days
(enhancements to existing £600/day) |
| Winforecast or Similar | Winforecast no longer available, see alternatives | Yes | POA | POA |
Your cash flow model may have to cope with all the following points:
- Will sales take off as quickly as planned, how much head room do I have to cope with the delay?
- Will my new customers pay as quickly as my current ones? Will growth be driven by a few large clients with the power to stretch payment terms?
- Phased increase in stock. Will I need to hold greater stock days on new lines?
- Will growth in purchasing cause me to hit credit limits with suppliers? Will I end up paying suppliers ahead of normal credit terms?
- What extra overheads, staff and properties are needed to deliver the growth plan?
Contact us to discuss your requirements
Modelling each of these points will add to the complexity of your forecast. The greater the number of points from the above list that are relevant to your situation, the greater the potential benefits in time saving and robustness you could expect from using a specialised forecasting tool, as opposed to building a spreadsheet model.
That said, it is possible to create ‘hybrid models’ where for example you build a sales plan in a simple Excel spreadsheet which feeds information to a specialised tool which can handle the sales and stock cash flow, and all calculations relating to overheads, payroll and VAT.
Consider foreCASH, Excel, or Winforecast/Sage 50 Forecasting clones.
