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Plan Your Cash Flow!

Whether you are running a Business or not, modern day life dictates you have to look after the Cash Flow. In its simplest form this even means that when you go down to the local Pub, you take enough funds with you, so you don’t run out of money! Now we all can sometimes end up in what we call ‘a round’ with our friends and sometimes family members. And yes, you do invariably come across someone in ‘the round’ who can be a little bit shy of putting their hand in their pocket (or purse), but perhaps even worse, those in the round who appear to have short arms and deep pockets! So, it is always important to plan your Cash Flow.

Cash Flow Planning for a Business is absolutely vital. Perhaps the best financial tool or indicator I have access to within our own Practice at JCL (Jones Cooper Limited), is certainly not our Sage system, or our Time and Fees recording system, or even our Internet Banking system. No, the most important piece of financial information I regularly look at and use, is our 12 Month Rolling Cash Flow Forecasts. I produce these Cash Flow Forecasts for the Practice each month and they reflect what is expected
to happen with both Cash In, and Cash Out, over the next 12 months. It also predicts the monthly Bank Balance at the end of each month, so I can identify the expected peaks and troughs of our Business and Bank Balances. As a final vital piece of information, these Forecasts also show the net Inflow and Outflow of monies covering the entire next 12 months. This means that if it is showing a net Outflow of monies, then I start to do something about this RIGHT NOW. I do not wait or allow this net cash outflow to actually happen! If you do prepare these Cash Flows on a rolling 12 month basis, you will always be able to adequately predict the highs and lows of your Business and adjust your Business Action Plans to suit, before the cash flow becomes a problem.

Now whether you are running a Business or just managing your personal finances from employment or the household kitty, everyone can benefit from a bit of basic cash flow planning. So, naturally when my wife says can we have a new 3 piece suite at home, I do trot out the standard response of “sorry dear, just done our personal cash flow planning, and the budget cannot really afford it yet”. So far this has worked for me! – But this could change of course if my wife is reading this blog. (So, look out for potential future blogs on ‘The Accountants Guide to a Happy Divorce!’)

I have at JCL (Jones Cooper Limited) a Cash Flow template if any of you Business people out there would be interested in using one for your own Business. Just contact me and I will happily provide it to you free of charge. I am absolutely positive you will find it a totally invaluable tool for your Business, and it will certainly help you improve and enhance your Business. But also in contrast, it may reveal some home truths about the future viability of your Business, and force you to have to make serious changes to keep the Business afloat. But at least you will have the foresight to see it coming, and keep the Business afloat by changing the BMW for the Reliant Robin right now, rather than later! Or, more realistically, what you would do is to start to formulate the appropriate Action Plans to ensure this scenario never actually happens. Without these Cash Flow Forecasts and Cash Flow planning in place, would you have seen this coming?? My advice, is don’t take this risk!


Rickey Cooper FFA, FMAAT, ATT
JCL – Jones Cooper Limited





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