How to keep the cash flowing as a sole trader Jul 10, 2019Views: 89
Having a positive cash flow is one of the keys to success for any small business. However, making sure your business doesn’t run out of cash is essential as well, don’t you think so?
That’s why, in the very early stages, the solopreneurs often use different tools that help them cope with the problem — for example, cash flow charts based on their transaction history. You can, however, take it up a notch by producing a cash flow forecast - a simple and effective way to control your cash flow.
Cash flow forecasts help you estimate the money you expect your business to bring in and pay out over a certain period of time. The income your business will be making from sales to customers, investment income and expenses such as supplier payments, staff salaries or payouts to HMRC - all this is very important as well and should be thoroughly considered.
Why making a cash flow forecast?
If you’re wondering whether making a forecast is relevant for you or not, have a look at the benefits it may bring:
- helps you to plan your resources
- assures that your business is aligned correctly
- helps you to make reasonable and realistic decisions
- gives you a better grasp of your funds
- allows you to understand your business performance better
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