Producing regular management information is one way to help improve your business decision-making. But looking at historical numbers can only tell you so much.

In business, you want to know what the future holds. And to make truly informed decisions about your future strategy, it’s important to use forecasting tools to project your data forwards in time. By running projections, based on these historical numbers, and producing detailed forecasts, you can get the best possible view of the road ahead – that’s invaluable.

Run regular cashflow forecasts

Positive cashflow is vital to the short, medium and long-term success of your business. Without cash, you simply can’t operate the business efficiently. Running regular cashflow forecasts helps you overcome this challenge.

With detailed projections of your future cashflow, you can spot the cash gaps that lie further down the road, and take action to fill these cashflow holes.

Income can often be unpredictable, especially in challenging economic times. If customers fail to pay an invoice, or suppliers increase their prices, this can all start to eat into your available cash. Using forecasting, you can extrapolate your numbers forward to which weeks, months or quarters are looking financially tight.

And with enough prior warning, there’s plenty of time to look for short-term funding facilities, or to get proactive with reducing your spending.

Run sales and revenue forecasts

Keeping the business profitable is one of the key foundations of making a success of your enterprise. You want your sales to be stable and your revenues predictable if you’re going to generate enough capital to fund your growth plans. And you need to know how those revenues will pan out over the course of the coming financial period.

Revenue forecasts work much like a cashflow forecast. Instead of looking at your future cash position, a revenue forecast gives a projection of your sales and how much revenue is likely to be brought into the business in future weeks and months.

With better revenue information, you’ll be more on top of your profit targets. You can manage your working capital in a more practical way. And you can improve your ability to invest in new projects, additional staff or funding of the long-term expansion of your business.

Run different scenario plans

What’s going to happen to your business in the future? None of us have a crystal ball to predict this future path exactly. But by looking at different possible scenarios, you can run projections to see what the potential outcomes and impacts may be.

These ‘What-if scenarios’ can be exceptionally useful tools when thinking about big business decisions. What if there’s an economic recession? What if our sales increased by 25%? What if we raised our prices by 10% next quarter?

What if we lost a quarter of our customers? By plugging the relevant data into your forecasting engine, you can run these scenarios and see how each option pans out. That’s massively useful when the worst (or the best) does happen.

Update your strategy, based on your forecasts

By making the most of your forecasting tools, you give your board, your finance team and your advisers the most insightful data and projections to work with.

A good business plan is designed to flex and evolve to meet the needs of the changing market – and the changing needs of your own business strategy. By making use of your cashflow forecasts, revenue projections and what-if scenario planning, you give yourself the insights needed to update your strategy and your business plan.

You can make solid, well-informed decisions and keep yourself one step ahead of your competitors. In the dog-eat-dog world of business, that’s a competitive edge that can make a huge difference.

If you want to delve deeper into the positive benefits of forecasting, please do get in touch. We can showcase the latest forecasting software and apps, and show you the value that’s delivered through well-executed forecasting and longer-term projections.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Excess stock is predicted to be one of the big challenges of 2023 for retailers around the world.

It’s been a stock rollercoaster for the past few years: supply chain problems made it hard to get deliveries, then as stock started rolling in, customers started tightening their purse strings.

If you have surplus inventory from 2022, here are 6 smart ways to maximize its use in your business:

1. Run sales and specials – A strategic sale on excess stock could be a way to win new customers. A lower price cuts into your profits, so make sure you deliver a superb shopper experience so you have the best chance of converting one-off bargain hunters into repeat customers. A flash sales event can be another way to boost interest in your brand.
2. Refresh, reposition and remarket – Repositioning a product can give it a second chance to catch a customer’s eye. Can you move the product’s position in your store and freshen up the display? If it’s online, could new photography or SEO copy help give it a second chance?
3. Bundle it up – Bundles can be a great deal for customers, and an excellent way to shift excess inventory. Match up overstocked products with in-demand items and sell them together at a lower price – you maintain a reasonable profit and shoppers appreciate the value. You can also offer multi-buy discounts on items, such as 10% off if you buy two, 20% off if you buy three or more.
4. Try a promotional giveaway – Use surplus stock to create promotional giveaways on social media and in-store. You can use a giveaway to attract new shoppers, grow your promotional database, and raise your profile. For instance, it could be ‘go in the draw to win this prize pack’, or ‘get this free gift when you spend X’.
5. Make a donation – Depending on the type of stock you have in oversupply, it might be possible to donate it to a charity – your free products support those in need and your business can get a PR boost.
6. Liquidate – If you really can’t shift your excess stock to shoppers, you may be able to find a corporate buyer. Local surplus stores, liquidators and auction houses may be willing to buy your overstocked inventory. Buyers will expect a hefty discount off the retail price, but it can be a fast way for you to shift excess product and free up space for new merchandise.

We can help you manage your inventory more effectively

We can talk to you about stock management, surplus inventory and any tax advantages that come with donating or writing off stock.

Do get in touch, we’d love to hear from you.

The following content was originally published by BOMA. We have updated some of this article for our readers.

With many businesses expecting a lower profit this financial year, the more prepared you can be for the unexpected, the better.

Managing expenses is a good idea at any stage in your business and you can also consider increasing your prices to improve your margins.

Smart ways to get your costs under control

Cashflow has been a big issue for thousands of businesses this year, and when the money’s not rolling in, it can help to rethink your costs. To do it effectively involves more than just keeping an eye on outgoings. It’s about looking at all the moving parts of your business to see if your systems (or lack of) are costing you unnecessarily. Here’s how:

• • • Muck in – Do a cost control audit to work out where your big cost centers are, and look at your systems for managing them.
    • Be aware – Don’t just slash your expenses without considering impacts. Also track costs and look out for opportunities to trim fat or take a different approach to get the same result.
    • Unite your team – Bring everyone together to monitor and analyze inputs and expenses. Reviewing and developing your systems? Get your team’s feedback.
    • Look to your peers – How do your costs compare to others? If a business of a similar size and production system to you is performing well, but spending less, explore what they’re doing differently.
    • Seek advice – Got a good idea of where the issues are, or feeling totally confused? Talk to your advisors about your next steps.

How can I put my prices up without losing customers?

If you need to change your pricing to make ends meet, be honest and up-front with your customers at all communication points.

• • • Make it clear on your website and social media that prices have changed and why.
    • Send an email to let all your clients and suppliers know about the changes.
    • Meeting people face-to-face? Make sure they’re aware of the price hikes before they’re invoiced, no one likes a nasty surprise, and many countries and regions have fair trading and/or consumer protection acts.
    • Provide the best customer experience you can by updating staff on any changes and advising them on how to communicate these with customers.
    • Worried you’ll lose fans? Consider staggering price increases of individual products over time.

Get in touch if you’d like us to help with an analysis of your margins and expenses.

The following content was originally published by BOMA. We have updated some of this article for our readers.

The statement of cash flows, (also known as the cash flow statement), shows how your business has generated and used cash (and cash equivalents) within a specific time period.

For each of the reporting categories, receipts and payments are listed (money in and money out), and this is reported as a net increase or decrease in cash held for that category.

The net change in all categories is added to the amount of cash on hand at the start of the reporting period to arrive at the current cash on hand figure at the end of the reporting period.

It is another important financial statement to understand in conjunction with the Profit and Loss statement and the Balance sheet. These three reports provide a good understanding of the financial position of your business.

How Does it Work?

The cash flow statement integrates the information provided by the profit and loss statement and the balance sheet into a current cash position. The cash flow statement is reported on a cash basis, while your other financial statements are usually reported on an accrual basis. Accrual income (from the profit and loss statement) is converted to cash by calculating the changes in the balances of asset and liability accounts.

Report Categories

The statement of cash flows is organized into sections that report on different types of business activity.

1. Operating activities – all business income, expenses, assets and liabilities (except for those assets and liabilities reported in investing and financing activities).
2. Investing activities – the purchase and sale of long-term investments, property, plant and equipment as well as security deposits paid to suppliers or received from customers and dividends received.
3. Financing activities – the changes in balances of equity accounts, for example, issuing and repurchase of stocks and bonds and payment of company dividends if applicable. Loans are also included in financing activities.

Formal financial report packages usually include notes to the financial statements. The notes contain supplemental information that explain significant items or activities that did not involve cash transactions. The notes may also include detailed reporting of categories that may have been reported as summary totals only in the profit and loss, balance sheet and statement of cash flows. Other items such as taxes, employee provisions, risk management or related party transactions may also be detailed in the notes.

Why is it Useful?

The statement of cash flows gives you a valuable measure of cash flow in and out of the business over a given period. It shows the ability of the business to pay its bills and fund its operating activities. This gives you a picture of overall performance.

It also shows the relationships between assets, liabilities, equity and cash accounts. It shows changes and movements over time, whereas the balance sheet and profit and loss reports show account values at a single point in time.

The statement of cash flows gives you vital information on your business.

• • • How strong is your cash position?
    • What is the long-term outlook for your business?
    • What activities generate the most cash flow?
    • What is the relationship between your net income and your operating activities?

If you’d like to understand your financial statements, cash position and future outlook in more depth, arrange an advisory session today. We’ll help you identify and appreciate the strengths of your business.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Tech-savvy businesses are taking big strides in making software, AI and automation work for their enterprise. Going digital could be one of the smartest moves you make.

In this series, we’ll look at some keyways to optimize your business, exploring different avenues to evolve your enterprise and create a legacy you can be proud of.

Let’s explore how embracing the latest software tools helps you optimize your business.

Going digital and putting tech at the heart of your business

Cloud-based solutions and AI-driven tools are the foundation stones of a modern, digital-ready business. You might have legacy systems and operational processes that you know inside out, but if you’re not in touch with the latest tech this could be a major competitive disadvantage.

Why are digital solutions so important for a streamlined and productive business?

Let’s take a look at five important ways that tech can change the way you work:

1.  Move your infrastructure to the cloud

Being able to connect to your business systems from anywhere with WiFi is a major advantage. Switching to Google Workspace or Microsoft 365 helps you collaborate remotely, share documents in real-time and centralize all your data storage and management. Cloud platforms are also cheaper to run, always run the latest software versions and scale with the business as you grow.

2. Automate your routine tasks with AI

Repetitive tasks are an important part of your operational processes, but they eat into your time and productivity. Automating these repetitive administrative tasks turns you into a more streamlined and efficient business. AI chatbots can manage first-level customer service tasks, ChatGPT can speed up your content marketing and tools like Zapier can be used to automate a multitude of different processes and operational tasks in the business.

3. Switch to SaaS for your financial management

Software-as-a-Service (SaaS) financial platforms, like Xero or QuickBooks, will transform the way you manage your finances and accounting. All your sales, transactions and expenses are managed in the cloud, giving you instant access to your numbers. You also have detailed reporting and automated metrics available to you. This is vital for making data-driven decisions.

4. Analyse your business data

Financial data isn’t the only data you should be analyzing. Using platforms like Power BI, Google Analytics and specialist industry analytics software helps you understand your customers’ behavior, optimize your marketing strategies, predict the performance of your manufacturing processes or manage your inventory in smarter (and cheaper) ways.

5. Get your cybersecurity up to scratch

With so many systems now in the digital realm, watertight cybersecurity is a must. This means having strict encryption tech in place, training your people in good cybersecurity practices and making sure you have complete control of your various in-house and customer data sources.

Talk to us about ways to improve your digital transformation

Switching to digital systems and SaaS tools doesn’t happen overnight. This is a gradual process of bringing the latest tech on board and learning how to get the most value from the software.

If you’re wanting to embrace the newest automation and AI tools, now’s the time to talk to us. Our team will be happy to review your systems and suggest the next tech upgrades that will deliver the most improvements to your business.

The following content was originally published by BOMA. We have updated some of this article for our readers.