by Rob Joseph, Director, BeaconCFO Plus
If you’ve been here a while, you might recall us sharing the number one rule in business:
Never run out of cash or credit.
(It’s worth sharing again—it is the number one cause of small business failure.)
If you are weighing the benefits of outsourcing CFO services, consider this: Accurate cash flow forecasting can make or break your business.
Cash flow forecasting involves estimating cash flow in and out during a predetermined period of time. This process can range from simple to complex depending on the size and scale of your business operations. A forward–thinking CFO can guide the forecasting process in support of your key business initiatives. The many advantages of cash flow forecasting include:
- Getting out of debt by having adequate cash on hand to make payments
- Avoiding breaching a debt covenant with a lender
- Achieving predictable long–term growth for your business
- Tracking your spending as an organization
- Anticipating shortages and surpluses in your industry
- Managing seasonality and maintaining working capital
- Staying ahead of cash flow
Whether you are a startup or an established small business, cash flow forecasting can be integral to your success. Your fractional CFO can build cash flow forecasts on a weekly, monthly, quarterly, or yearly basis, and ramp up forecasting as needed if your organization is restructuring, navigating a time of economic instability, or going through an acquisition.