Why you need cashflow planning software

Hi, everyone. I hope you’re having a great day. It’s Nishi Patel from N-Accounting. And today, I just want to talk you through what cash flow planning software is actually available out there at the moment. And why, to be honest, pretty much every growing business should have it.

So, one thing I can say is, I qualified as a chartered management accountant in, I believe it was 2010. And obviously, I was studying before then. So I’ve probably been working on forecasting and accounts since 2007. And it’s only since I actually got into the small business world, I started getting a good understanding of the different types of software that are out there. Because the software for small businesses tends to be far better and more accessible, than software for larger businesses that I’ve seen. I think it’s just a lot more affordable. There is good software for big businesses as well.

So what I wanted to do is just give you a bit of an outline, in terms of what cash flow planning and business forecasting has been like in my career up to now. The biggest challenges we’ve faced, and then one of the biggest solutions available, which will really just skyrocket your growth. So typically, in the past, we’ve always done everything on spreadsheets. So what would happen is, you’d have a forecast, it’d say, “You’ve got starting bank balance”. And based on the starting bank balance, everything you’re expecting to come in, plus everything you’re expecting to go out, will then give you an end bank balance for that month. Then, if you keep doing that every month for the next year, two years, three years, then, in theory, as long as you are reasonably accurate in terms of what’s going to come in, what’s going to go out, you will then end up in a position where you can reasonably predict your bank balance at the end of every month.

So why would you want that? Why would you want to predict your bank balance at the end of every month? Well, quite obviously, if you’re going to run out of money, it’s better to figure it out, probably, months in advance. Because the saying, “People will only ever lend to you when you don’t need the money. And people won’t lend to you when you do need the money.” So by the point where your business runs out of money, your credit rating’s already trashed. So if you’ve got the ability to predict how much money you’re going to have, and if you’re going to run out, a year before, two years before it happens, then you can actually just take some proactive and long-term action to actually then put the right funding in place.

And there’s other things you can do. You don’t always have to get funding to maintain your cash flows. You might just say, “I’m not going to pay the bonuses.” You might just say, “Well, that bit of investment we were going to do, it’s clear from a cashflow point of view, we can’t invest it. So we can’t afford it, so we’ll just delay it.” So the idea of predicting your cash flows is so you can make decisions well in advance.

Also, it goes together other way. If you’re going to end up with too much money in the bank account, and then you need to find proactive ways to start investing that in long-term investments for your business and long-term strategies for your business. Rather than just realizing at the last minute, then just throwing it at whichever supplier sounds the best at the time. So it’s all about doing your research and doing your preparation.

So you know what? A lot of these larger businesses, they used to hire accountants like me. They still do. And the reason they had to hire these accountants, and let’s face it, we’re not cheap when we’re working for a larger company. A finance manager’s going to cost you about 70 to 80 grand a year. So one of the things about hiring these team members, the reason they had to do it is because, typically, in the past, they’ve always done everything on spreadsheets. And what happens is, because the month ends and then the next month starts, you then need someone to actually go into that spreadsheet and then rework all your calculations to factor in that a month has just dropped off the start. But then you’ve got to put a month on at the end. So actually cash flow forecasting in the past was a very expensive investment for larger businesses, but they always saw the value in it.

So the one thing that small business owners are really, really overlooking at the moment, is the software that is replicating that for a fraction, less than a percent of the cost. So one of the bits of software that we use in my business, and I will just show you, we use a bit of software called Float. And what Float does is, it’s almost like a bit of a spreadsheet. I’m not going to zoom in too much because, obviously, I don’t want to publish all my finances online. But what Float does is, it actually connects up to Xero. So when you create your forecast, it then pulls information out of Xero, and it actually shows you how you’re doing compared to that. So if your forecast is particularly unrealistic, and when you actually do have money coming in or going out, you understand that contrast. That’s hugely important in helping you refine your assumptions. So that’s a really important one.

But one of the biggest time savings is the fact that, every month, it just repopulates itself. You don’t have to worry about messing about with spreadsheets. And also, when you’re doing stuff on spreadsheets, you’re more likely to make a mistake. Whereas, this is always right, because it’s a program and everything’s coded in. So it takes the human error out of forecasting, it helps you understand how you’re actually doing compared to your assumptions. And you know what? This costs, I think, probably about 50 or 60 quid a month. But for the fact that it gives you complete control over your finances, it’s an amazing bit of software. It’s also great because then you can run other scenarios. So you can say, “Well, what if my growth was more than I originally planned, what would it look like?” And then it’ll say, “Well, originally you planned this kind of growth, but now it’s this.” So it’s a really good bit of software.

And what we do with our software is, we actually give that to our clients. So we do a lot of business modeling for our clients because our signature solution, Apex, is around helping people build their million pound business. So we can show them what their million pound business will look like from a packages, products, volume pricing, and then, staff overheads and marketing perspective. And then what the sale value would be and what their take home pay would be. But ultimately, when you’ve got the end result in mind, you’ve also got to understand the steps to get there and what the risks are in getting there. So that’s how we use that bit of software, which I just showed you. It’s about actually just saying, “Okay, well, we know where you want to be, but let’s look at how you’re going to finance your business on the way there.”

So I think a lot of business owners can use it by themselves, but when you couple it with a business model and proper financial insight, then it becomes an incredibly valuable tool. Obviously, we give it to our clients for free as part of our Apex program.

So if you’re interested in finding out a bit more, if you have a business, which might only be worth a couple of hundred pounds… Sorry, £100,000, or it might just be worth a couple of hundred pounds. And you want to understand how you can make it into a business you could sell for a million, then you’ve got our Apex program. We’ve got a million pound processes. And everything in conjunction, including forecasting software and capabilities, will get you to your million pound business. So book yourself in for a free strategy session with me. Just comment below or email me. You got N-Accounting, so you’ll find all our contact details there. And I’ll talk you through exactly how you can do it. If you found this video useful, also like, share, and follow, and subscribe. And I look forward to seeing you at the next one.

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