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06 December 2017

Following on from last month's cash flow blog, we thought we'd go into more detail on how we approach cash flow forecasts. 

For most Companies in New Zealand the Christmas period can be a real rush, and quite often some of the business best practices are shortcut to ensure everything gets done.

Unfortunately, cash is often one of those things that sometimes is left in the “here’s hoping” file.

I was talking with a few of the banks that we deal with recently, and they all commented on how many requests they get in the New Year when cash is tight.

Do these scenarios sound familiar to you:

  • Spend a whole heap of time and money before Christmas getting work done
  • Pay out holiday pay leading up to Christmas
  • Have provisional tax due 15 January the following year
  • Have GST for the two months to 30 November due 15 January
  • And GST for the two months ended 31 January is due at the end of February
  • Add in PAYE and other taxes along with a few slow paying customers (who are still on holiday)

Sound familiar. You are not alone. Banks see this all the time and are continually asking us to help people plan for these cashflow dips in advance. This means instead of ringing up the bank in early January; we can let the bank know what our requirements are up to 12 months earlier. Guess who the bank would rather deal with?

So how do we do it at enablebusiness?
At enablebusiness, we’ve found that we have a knack for forecasts (and that our clients’ bank managers love them). Our forecasts are backed by detailed assumptions that are easily understood by our clients and their banks alike. The easier they are to digest and sense-check, the more comfort banks have in relying on them.

We prepare full integrated forecasts – these go beyond a simple Profit & Loss forecast to include a balance sheet. We consider some key aspects, including current and future taxation, assumptions regarding capital expenditure requirements, how quickly customers pay, and how quickly suppliers are paid. This results in a comprehensive and detailed cash flow analysis.

We also include various sensitivity scenarios, which model the impact on the bottom line and the bank balance should sales increase or decrease. This allows bank credit departments to accurately assess the risk of the business.

So would you like to phone the bank on 14 January asking for help or would you like the bank to recognise you as one of the businesses that adopt best practice and is at the front of the queue when you need help?

Need our support? Call to book a complimentary appointment with one of our team today.

Contact us



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