Cash Flow
Am I making the best use of my business cash?
Ask any business owner of any sized business their greatest issue in business today and they'll likely say cash flow. It's a concern for everyone. And HSBC would like to help.
Basics of Analyzing Cash Flow
The place to start for greater control over cash flow is with a cash flow analysis. This helps determine the amount of financial help a company needs. In some cases, you may not even require financing.
Most businesses have a cyclical nature - highs and lows, hot sales months and lulls, periods when materials cost more or less than usual. A cash flow analysis helps highlight these cycles, showing times when available cash rises or falls, or when cash outlay may result in a shortfall.
Once these periods are identified, they can be controlled. This, in turn, helps you determine when credit may be needed. An accurate cash flow analysis can help your company better manage its money by increasing income or decreasing borrowing expense.
How to Use a Cash Flow Analysis
By covering the full range of your company's receipts and payments, a cash flow analysis is a useful tool in developing business plans and marketing strategies. (Do you promote during peak times or try to stimulate growth during lulls?)
It's a powerful tool for diagnosis as well. By preparing a cash flow analysis, you can find ways to cut costs, identify potential trouble spots, rearrange work flows, or even discover untapped financial resources you didn't know were available.
Develop your Own Analysis
Download and save the sample worksheet for a cash flow analysis. While it may not cover all of your particular receipts or payments, it can be a useful guide to construct your own.
The form is designed to help you determine the extent to which borrowing facilities may be required. It is an estimate of future receipts and payments, which may be shown on a periodic basis.
Two columns are provided for each period. The budget column is to be completed with the estimated figures. The actual column is to be completed at the end of the period so the accuracy of your budget may be assessed.
