Here at Adams Moore, we encourage all our clients to produce and use a 12 month profit and cash forecast. I’ll explain the top 5 benefits of producing and using a 12-month financial forecast, which is included in the price of all our Finance 360 Services

1) Enhanced Decision-Making

A 12-month financial forecast provides a clear picture of your expected income and expenses over the next year. This insight helps you make informed decisions regarding investments, cost management, and growth strategies. Knowing what to expect allows you to take proactive steps to ensure your business stays on track.

2)  Knowing your Break Even Position

Your business changes every year. Changes in Customers, Suppliers, work force, or inflation means that your break even position changes all the time. Knowing what turnover you must achieve each month to break even gives you the ability to make clear decision and explain these to your team.

We work hard with our clients to ensure that as much business is repeatable either on monthly invoices, or longer contracts. This means each client know the minimum they need to sell each month.

3) Cash Flow Management

Effective cash flow management is crucial for the sustainability of any business. A financial forecast helps you anticipate periods of cash surplus or shortage. With this knowledge, you can plan for necessary financing, adjust your spending, or take advantage of growth opportunities without jeopardising your cash flow.

In addition when your company is growing, this generally means cash flow takes a dip initially before customer payments catch up with Turnover. This needs careful planning.

4) Improved Stakeholder Confidence

Investors, lenders, and other stakeholders appreciate businesses that have a clear financial plan. A well-prepared 12-month forecast demonstrates that you are serious about managing your finances and growing your business, increasing their confidence in your ability to achieve your objectives.

5) Early Identification of Potential Issues

Forecasting allows you to spot potential financial challenges before they become critical. Whether it’s a dip in sales, rising costs, or a seasonal downturn, identifying these issues early enables you to take corrective action and avoid crises that could threaten your business.

We hate being Accounting Historians, using a 12-month financial forecast is a proactive step that ensures your business is prepared for the future, enhancing both stability and growth prospects.