ROI Tips for Business
A cash flow forecast is a key diagnostic ROI tool for the health of a business. Without one, getting your business’s cash flow right is almost impossible.
Many businesses operating without an ROI cash flow forecast don’t even realise their margins are coming under pressure, according to CPA Australia policy adviser Jan Barned.
“Small business owners in particular often shy away from putting together a forecast because they find it hard to gauge the affect different factors will have on cash flow – events like the introduction of a new product line, marketing venture or extra staff member can have an uncertain impact.”
But Barned makes the point that forecasting is a business skill like any other, with accuracy improving with practice and experience. The important thing is to just start doing it.
Here are Barned’s five tips for putting together a solid cash-flow forecast:
Keep it simple:
Piling everything into a ROI cash flow won’t necessarily make it a better tool. Focus first on the items that affect your cash flow most heavily and add extras to the forecast if required.
Ensure procedures for collecting and reporting cash-flow data are consistent across all business units.
Measure your accuracy:
Set the level of variance from your cash flow targets you are prepared to accept, and see how close you get each month. Where targets are missed, investigate the reasons and consider if changes are needed for next month’s forecast.
Reward those who help:
For all but the smallest businesses, putting together a cash-flow forecast requires significant input from staff. Make sure they know they will be rewarded for putting in the effort to provide accurate and timely data.
Automate and integrate:
If possible, set up business reporting and accounting systems so they provide automatic inputs into your cash-flow forecast.
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ROI equals Return on Investment
Good advice, practical and effective.
To understand your business ROI cash flow better check out these links to help you, your business and your business health.
The meaning of a ROI Cashflow Forecast from Wikipedia
Cash flow forecasting is (1) in a corporate finance sense, the modeling of a company or asset’s future financial liquidity over a specific time frame. Cash usually refers .. etc
From the business link from the UK Gov, a very real explanation and good links to follow. The ROI principles of cashflow forecasting.