Understanding cash flow in a seasonal business is integral to its survival. Regular reporting and forecasting will keep you on top of your Business’ cash position and allow you to identify any cash shortfalls before they happen so you can do something about it.

The following case study demonstrates how we helped our client get on top of their cash flow difficulties and give them the confidence to grow their business.

Background

Our client operates a young and rapidly growing product and services business. Our client was finding it stressful to manage their cash flow as the seasonal nature of their business meant that budgeting for quieter months was not at the front of their mind.

What we did

Annual budget

We conducted a detailed review of their business income and expenses and put together a budget for the financial year. The budget also formed the basis of a cash flow forecast that took into account the timing of receipts and payments, providing an accurate estimate of their bank balance over the coming months.

To prepare the budget we worked with the client to understand the performance of their business over the last 12 months and their expectations for the coming financial year. This process included consideration of planned marketing campaigns, inventory purchases and other day-to-day business activities.

Monthly reporting

Within ten days of the end of the month, we delivered a monthly performance report that compared their budget to actual income and expenses. We also tracked their cash balance in line with the cash flow forecast, highlighting any expected cash shortfalls that arose from changing business conditions.

Quarterly face to face meetings

At the end of each quarter, we met with the client to discuss their performance for the previous quarter and agree on key focus areas for the quarter ahead.

Working with the client, we set goals for the coming quarter and the strategies to achieve these goals. We monitor the progress of these strategies as part of the monthly reporting to keep them on track between meetings.

Outcome

Since beginning the Business Performance engagement, our client is more effectively managing their cash flow.

‘I have peace of mind that I can spot any trouble well before it becomes a problem’.

Client

The client found the annual budgeting exercise especially enlightening as it helped them turn their mind to the future rather than the past. They were able to consider their marketing strategies in light of what it meant for the numbers and gave them the confidence to put their plans into action.

On a few occasions to date, the monthly reporting has highlighted impending cash shortfalls. These are managed by communicating with suppliers promptly to negotiate extended payment terms and obtaining an overdraft three months before it was required.

With cash flow under control, the client uses the quarterly meetings to keep focussed on hitting targets and sounding out growth strategies. We are able to provide deeper insight into the numbers and provide smart ideas based on our experience from working with hundreds of other businesses.

‘It’s a regular time when I get to celebrate the wins or get the kick up the butt I need from someone else. mi-fi keeps me accountable where no one else does’.

Client

How we can help you

Understanding what your business numbers mean, planning, and staying disciplined are all areas entrepreneurs need to be across. However, the day to day of running a business often gets in the way.

Our Business Performance Plans are designed to give you the insight, ideas and discipline you need to run and grow your business with confidence.