Financial Forecasts

There are 3 types of financial forecast for a business:

  • Profit & loss forecast, also known as a budget
  • Cash flow forecast
  • Balance sheet forecast

At Direct Peak, when we put together a financial forecast we like to provide all 3 types of forecast at the same time. We start the process by setting the budget.

Budgets

Many businesses will know how much they are expected to turnover next year or maybe in even 5 years! This is because they have an accurate budget in place. This is something we can prepare for you and then compare it alongside your management accounts to make sure you are staying on track. We know the right questions to ask to make sure the budget is as accurate as possible.

Cash Flow

The top priority in any business is cash! The cash flow shows where you have spent your money and how much you have spent compared to how much money has come in. This financial report can be a key indicator to show you where you are potentially losing money within the business. This report can be extended into a forecast to give further information.

Cash Flow Forecast

Leading on from the cash flow report, it is imperative to know your business is not going to run out of cash! Using the management accounting information, we can forecast your cash by looking at how much is owed to you and how much your need to pay to creditors. It could be that there is a hole in your cash in a few months, giving you the time to get a loan in place. Alternately you may have a surplus of cash allowing you to plan your next investment.

Balance Sheet Forecast

The balance sheet forecast goes hand-in-hand with the profit & loss and cash flow. It is an essential part of the forecast as it is the checking mechanism to make sure the accounts balance when forecasting into the future and provides a sense check on the numbers that have been forecasted.

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