Continued interest rate rises, cost of living increasing and economic uncertainty, managing your cashflow both personally and in your business is now more important than ever before.
TIP 1: Forecast your cashflow monthly for the next 12 months
- Estimate your income with assumptions or formula’s if possible
- Estimate your expenses based on what you currently know
- Once prepared for 12 months, break it down to 3 monthly and update this every month (forecasting for 3 months should provide better accuracy)
- If you have any negative months, review and if no changes, you should seek eternal advice.
TIP 2: Review income and opportunities to increase
- Are your business and financial models sustainable?
- Are you crystal clear about your target market and competitive advantage or your family expenses, like next year’s school fees or visits to the family dentist?
- Can you introduce new products and/or services with appropriate profit margins?
- Are you getting an appropriate return on investments? In your business or those longer-term investments with a goal of securing the future of your family or lifestyle goals?
TIP 3: Review your expenses for appropriate value
- Review each expense you have and ask the question “Am I getting value?” and if not seek alternatives.
- Not necessarily about reducing costs, but about “value” as cutting costs for the sake of it has it’s risks (e.g. marketing or even that gym membership).
- Talk with your suppliers about how you can reduce their invoices (if you have costs of goods) for example, pay invoices sooner than payment terms to receive a discount.