Small Business Advice

The role of expert cash flow forecasting in creating a successful business

19 Dec 2018

Whilst there are many aspects to the Brexit argument, the theme of uncertainty has loomed large throughout the entire process.

As the March deadline approaches, businesses across the UK are having to consider what the outcome, whatever it may be, will mean for them.

One area that could cause major logistical and financial disruption to businesses is the supply chain.

At this point, we’re unsure if we will have a frictionless trade border with the EU as we do currently, nor is it clear if duties and tariffs will change on goods imported from EU countries.

The latter, as well as the prospect of delayed delivery times as a result of new processing measures, will be a cause for concern for those businesses reliant on EU imports.

The knock on effect of this uncertainty means that businesses will struggle to accurately forecast how much stock to hold or forecast their cash flow.

This is where our business coach comes in.

In producing a financial forecast for your business, you will get a rolling forecast of your cash flow, which means you're always going to be up to date on your cash position.

Is your business experiencing cash flow trouble? Get in touch to discuss how our MBA-qualified business consultant can help your business become cash positive both now, and in the future.

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Alternative methods of prediction

In particular, businesses using just-in-time production methods, which are commonly used to increase efficiency and reduce the costs of holding stock, could see their production lines grind to a halt if their precisely timed deliveries are delayed.

Likewise, those that are trading on fine margins could find their business model isn’t viable if the cost of goods increases due to new duties and tariffs.

All of these factors could have a perilous effect on businesses across the country, but there are ways of preparing for these scenarios to limit the damage.

For example, building stock reserves at current prices will allow accurate forecasting of margins into the future and instil confidence when filling customer orders.

The challenge that comes with this is the need for strong cash flow, as businesses may struggle to find the reserve cash to invest in new stock without the help of a lender.

Whilst there are many finance options available in the market, a trade finance facility is best suited for purchasing goods.

This type of funding protects the interests of both the importer and exporter, as the buyer can have access to the goods immediately and the supplier is paid simultaneously, meaning the acquirer can fulfil orders and build stock reserves without dipping into its working capital.

Identifying other sources of supply

Another option would be opening other supply lines to allow for dual sourcing of key components or products, which will combat delays and/or increased costs associated with EU suppliers.

In this scenario, companies can pay upfront for goods with a trade finance facility in place, instead of requiring credit terms. This will no doubt make the negotiations easier and instil confidence in the supplier.

Importing goods remains a priority to UK business; whether it’s because there are cost benefits associated with doing so or simply because products aren’t available in the UK.

This won’t change after Brexit, so it’s important that supply lines are protected to ensure business continuity.

Trade finance is one of the ways that businesses can do this, and it should be considered by companies that rely on overseas trade, but are concerned about what the future holds for their operations.

Does your business have a robust and reliable financial forecast in place? If not, get in touch with our team to discuss how we can create a bespoke financial model, specifically designed to drive your business’ performance.

Louis Lines


MBA Qualified Business Strategy and Planning Specialist

0207 043 4000

About the author

Louis has had a diverse and interesting business career to date - a clear benefit of this is his real world commercial and practical experience and entrepreneurial spirit.

He has an MBA from Manchester University.

Other career experience includes a stint in the City, working with a renewable energy fund, working 30 miles south of the Canadian border building amazing timber framed houses and living the American Dream!  
Louis spends his time at Accounts & Legal providing creative solutions to complex problems. Whilst most accountants spend their time looking back at what a business has done in the past, Louis focuses on helping our clients look forward, planning for the future making sure that their business is best positioned to grow effectively.


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