Why hire Taccount as your forecasting and projections advisor in Dubai?
“A business will become bankrupt if it runs out or falls short of cash and unable to get new finance. This is because cash is the most important part of all businesses, particularly startups and small companies. Consequently, cash forecasting is not negotiable if you really want to determine what will happen to your cash flow so that your business will have sufficient fund to survive.”
Cash forecasting is a precious business development tool. It will guarantee that you have the right amount of money at the right time for the smooth and effective running of your business. Forecasting your cash will help you predict cash gaps and surpluses in advance.
With the global economy turning out to be more competitive every day, it is rather challenging and difficult for businesses to handle all their financial and accounting issues on their own. As a result, they need a reliable professional accounting company that can solve these matters in a hands-on and most efficient way.
In total reverence to the convention and rules of the accounting matters in the UAE, The TACCOUNT carries out numerous accounting services channeled towards the needs of small business in Dubai.
Tips for Accurate Cash Forecasting
Without doubt, cash forecasting is one of the essential things your business should be doing. It is simply how your company can predict your annual profits compared with your year-end debt. In addition, it lets you get a clear glance of where you are making the most and discover where your business is dripping money.
With cash flow forecasting, you can set your financial objectives for the next year. But how do you set your cash flow forecasting?
Continue reading to find answer to this question.
Estimating how many sales you think you will bring weekly or monthly is the first step in any cash flow forecast. Referencing the history of your previous sales is a great way to get these estimates. In other words, check the previous years and try to get a good idea.
Apparently your sales won’t be consistent all the time. Therefore, consider the patterns that are the same each year, and those factors that could change each year, like promotions or trade shows, when you are making your projections.
You also need to think about your future plans deeply. Any new products you introduce into the business or marketing efforts you make should let you increase your sales forecasts.
As a seasoned entrepreneur or business owner, you must understand that you don’t always get the money you earn instantly. You should be waiting for a period of 30+ days for many of your sales to receive the cash. Hence, it is vital to estimate when you expect payment from your sales whenever you are preparing cash forecast.
It is absolutely vital for you to estimate how much your business spends, when preparing your cash forecast. These costs have to be both fixed and variable, but you should do the best you can. Your fixed costs include rent and how much you are paying employees.
Variable costs on the other hand are related to the sale of the product or service you offer. Therefore, to help you estimate a number of these variable costs refer back to your forecasted sales. Put in your best possible to estimate the bills you are expecting and when they will need to be paid.
Make sure you go through your previous year expenses, and also make sure there are no annual fees you forget to include since they only come once a year. Once estimated, make sure you incorporate these costs into your cash flow forecast.