How to Screw Up Your Cash Flow Forecasting: the Income Line
Credit’s big in business, too. Ever heard of a company credit card? Yes, that CEO better keep a close eye on that one. More importantly, though, is how a business can screw up their credit not from the ground up, but shockingly enough — from the very top.
Cash Flow Forecasting Largely Relies on the Income Line Predictions!
What that is, simply put, is the statement of cash flow from the very top: we’re talking about actual income projections. The actual forecasting. If it’s not done right, cash flow forecasting basically sucks! It’s the biggest error a business can make, and perhaps not one financial adviser on planet Earth can rectify it (but perhaps Cloud Based Bookkeeping can!).
It’s not, though, like you have a monkey crunching the numbers. You don’t have to be a dunderhead to make the big errors in cash flow forecasting, really. All it takes is one subtle inefficiency, and the entire financial structure can come crumbling down. That’s a bad thing given the fact that this inefficiency comes from the very top.
A typical error you might see when it comes to cash flow forecasting is the line item incrementalizing. In other words: don’t ever forecast growth for the next year based on what you did last year. Just because your business grew by 10% doesn’t mean you can forecast growth at a 12% rate. We understand ambition, and we certainly like to see people swing for the fences. But when it comes to taxes and finances…. Anything goes.
Education Is Power When It Comes to Finances
So says H.O.P.E., right? Seriously, though, whether you’re a rent-to-own landlord looking for a consultant to make sure all the numbers and legal stuff’s squared away, or you’re just in business to get your bookkeeping done right as this review states, one thing’s for sure: the assistance, education, and consultation available will be a tremendous help even when you’re doing a DIY credit repair. Be in the know. Right now.
The post How to Screw Up Your Cash Flow Forecasting: the Income Line appeared first on Independent Credit Solutions.Share