Cash Flow Management

Cash Flow Management

Financial forecasting keeping you ahead of the competition

What is a cash flow forecast?

A cash flow forecast allows small business owners to monitor incoming and outgoing funds, as well as anticipate future cash flow patterns over a specific duration. This report aids in gaining a comprehensive understanding of the business, identifying trends, and preparing for potential borrowing needs.

Furthermore, it provides detailed insight into how sales, purchases, and other daily operational expenses, no matter how small, impact the business’s bank balance.

By consistently practicing cash flow management, you can stay informed about the current financial resources available to keep your business operational.

Preparing a three-way cash flow forecast

Three-way forecasting integrates profit and loss, balance sheet, and cash flow data to provide a comprehensive overview of your financial position. By combining assets, expenses, and cash flow figures, you can generate financial forecasts that outline the potential of your business model, which is precisely what banks or investors seek when financial assistance is required.

Now, let’s delve into how cash flow interacts with your profit and loss statement and balance sheet, and explore how you can optimize financial forecasting and future planning by leveraging the insights derived from all three reports.

Understanding your profit & loss (P&L)

The profit and loss statement (P&L) provides an overview of your company’s revenue, costs, and expenses during a specific period, indicating whether your business is profitable or not. However, when your company sells multiple products with varying turnaround times, it becomes challenging to determine the exact amount of available cash at any given time. The inclusion of wages, payroll, VAT, corporation tax payments, and other overheads further complicates the situation.

Speak to our specialist cash flow management Accountant.

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What is my balance sheet telling me?

A balance sheet provides a snapshot of your business’s assets, liabilities, and equity at a specific moment. It reveals what your business owns, what it owes, and the amount invested by owners, all reported on a single day. Essentially, the balance sheet indicates the value of your business at a given point in time.

Monitoring cash flow keeps you ahead of the game

Our expertise allows us to guide you on the fluctuations in your cash flow, highlighting both the peaks and troughs. By carefully charting the anticipated cash movements across various aspects of your business, we can assist you in effective future planning.

For instance, if a successful year leads to a corporation tax bill that surpasses initial expectations, we can incorporate these payments into the cash flow projection for the subsequent year. Additionally, our tax advisory team will explore strategies to minimize your tax obligations, ensuring a more favorable outcome.

Reducing cash flow risk during business expansion

As a business expands, there is an increased strain on cash flow due to the accumulation of inventory and outstanding payments from debtors. This situation, known as ‘overtrading,’ poses a risk to cash flow management for many businesses, particularly those experiencing rapid growth following a period of recession.

Our advisory services aim to assist you in effectively managing this risk while maximizing returns for your business. We can provide tailored advice and recommendations that enable you to maintain control over the cash flow challenges associated with expansion.

Why cash flow management is important – an example

Why choose us?

Our expertise lies in delivering precise and all-inclusive predictions of cash flow, ensuring the security of your future endeavors, or supporting funding/loan applications.

With our wealth of experience, recognized accreditation, and deep understanding, we can effectively assist our clients’ businesses. Our team of experts will engage in meaningful discussions to identify opportunities for cost-saving and enhancing cash flow, ultimately boosting your company’s efficiency, profitability, and attractiveness to potential investors.

Thanks to our extensive 30-year background, we possess the ability to identify early signs of cash flow challenges and provide suitable recommendations.

Our services encompass:

  • Cash flow forecasts – an ongoing cycle to optimize cash utilization
  • Adjustments for regulating cash flow
  • Establishment of financial targets
  • Modified cash flow forecasts
  • Forecasting profit levels and determining cash flow requirements for management and other financing sources
  • Reports on profit and loss (P&L) and balance sheet
  • Reports on cash flow statements
  • Inventory management


Prioritize Cash Flow over Profit. However, the key lies in effectively managing your cash flow. Continuously evaluate your earnings in relation to your break-even point. If you find yourself earning more than the break-even point but still experiencing financial constraints, it is likely that you are facing challenges with your accounts payable, accounts receivable, or experiencing shortfalls.

In the statement of cash flows, the financing activities section records the cash inflows obtained from short-term bank loans and the cash outflows utilized for repaying the principal amount of those loans.

  • Perform routine cash flow evaluations
  • Address delayed payments
  • Establish automated payment reminders
  • Familiarize yourself with your working capital

Engaging a proficient accountant is one of the most effective solutions for managing cash flow in small businesses. Utilize the expertise of an accountant to analyze your cash flow and identify cost-cutting strategies. Additionally, an accountant will ensure compliance with tax obligations and maximize tax efficiency.

To uphold a favorable cash flow and predict future cash flow patterns using past transactions and historical financial or operational data, businesses employ cash flow management software. Xero, QuickBooks, and FreeAgent are three prominent market leaders in this domain, and we proudly hold accreditation as Pro Partners/Advisors with these platforms.

Several applications are available to provide vital real-time cash flow insights, empowering you to make informed decisions regarding the future of your business. Noteworthy options in this regard include Futrli, Float, and Fluidly. These applications equip you with the necessary tools to gain valuable visibility into your cash flow, enabling you to navigate your business with increased confidence.

Undoubtedly, this stands out as the foremost justification for conducting a cash flow forecast. It ensures the business’s ability to meet obligations such as supplier and employee payments. Additionally, it aids in identifying issues pertaining to customer payments, as the process of preparing the forecast prompts the business to assess the promptness with which customers settle their debts.

The cash flow forecast anticipates the net cash flows of the business for a specific period ahead. A business utilizes the cash flow forecast for the following purposes:

  • Recognize potential deficiencies in cash balances: If the forecast reveals a negative cash balance, it is crucial for the business to ensure the availability of an adequate bank overdraft facility.

A three-way cash flow forecast integrates the three essential financial reports into a unified projection. By connecting your profit and loss (P&L) statement, balance sheet, and cash flow statement, it enables you to forecast both your future cash position and overall financial well-being.