A well known statistic is that 50% of small businesses fail in the first three years. The main issue is poor cash flow management.

After two years of COVID, if your business was lucky enough to survive, tougher times may be ahead. Some reasons for this is:

  • No more Government assistance
  • Creditors will be more demanding as their cash flow may be in danger
  • The ATO is tightening the screws on outstanding debts after being understanding during COVID

A cashflow forecast tracks the sources and amounts of cash coming into and out of your business over a given period. It enables you to foresee cash amounts held by your business to see if you have sufficient cash to fund your debts at a particular time.

By doing this, you are being proactive when you may need to take action such as getting an overdraft or doing stock clearances to make sure your business has cash to meet its needs.

When you are making forecasts, it is important to use realistic estimates. This will usually involve looking at last year’s results and other factors unique to your business.

Should you have any questions on the items above, please contact Mark on 02 9923 2959 or mark@mcaccg.com.au