Cash flow forecast

Its a tired old cliché but it still rings true – Cash is king.  A business may be profitable but still fail due to poor cash management.  Small business needs to forecast out for a minimum of six months their cash flows in and out of the business.  Shortfalls need to be identified early to ensure corrective actions can be taken.  Allowance need to be made for BAS payments, income tax and asset purchases.  And bank overdraft limits need to be managed.

Financial Budget

A yearly profit and loss budget must be prepared to ensure the business is forecasting a profit, to establish its financial targets and to measure actual performance against theses targets.

Monthly Profit and Loss Statement

Each month the business needs to establish whether it has traded at a profit and assess whether its budget is being met.  Too often businesses only have profit and loss statements produced yearly for tax purposes.

Regular stocktakes

Without regular stocktakes (at least monthly) the business will not be able to establish its closing stock position, which is essential to determining whether a profit or loss has been made for the relevant period.