Beware The 6 Month Forecast In Uncertain Times

Trent365
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Automatic TRANSCRIPT

The idea of a business forecast and particularly cash flow forecast is something. I've spoken to you about a few times on the show. And i do believe that they are super-critical document for you to run your business survive particularly if you're a nice small business but the other thing you need to be aware of. Is that in uncertain. Times likely out right now a cashflow could actually ended up getting into trouble. If you let it lull you into a false sense of security because we've just been in the process now of doing a six month cash flow and it's very easy of course not knowing what's coming up to just take your last month's revenues and you'll last month cash in and out and basically just extrapolate that over the next six months because you don't really know what the next six months hold but the problem with doing that is that if you've been through peak period like we just have over the christmas holiday period and if you extrapolate that then come march or april you might be out of money because you've anticipated much more cash coming in the mortar. Have actually gone so. It's just important that depending on your business and depending on what your timelines off your cashing in your cash out that you make sure that yes you do a cash flow statement but you don let it lulled into a false sense of security any cash flow statement of course must be reviewed every month and opinion your business. Maybe you wanted to a twelve month cash flow. That's reviewed every month. But if you may be sought borrowings for example you might need to do a three zero four year cash flow. Which again is just it's crazy guesswork. At a time like right now we just don't know but of course any investor or any. Linda were want to see that. There's a chance for you to pay that money back. So they might ask for a three year or five year cash flow so cashflows super important. Just beware with all of your forecasting work especially cashflow stuff that you very very wary. You don't get lulled into that false sense of security when you're doing a six month forecast or twelve month for that matter during these times of uncertainty likely going through right now

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