Every business should have detailed monthly financial forecasts and ideally these are prepared before the start of the financial year. If the business has a 31 March balance date then the ideal time to prepare the projections for the coming year is January, February and/or March. But it’s a case of better late than never… if you don’t already have detailed forecasts, then now is the time to start.

The forecasts usually include a Statement of Financial Performance (forecast profit and loss), Statement of Cash Flows (how the cash position is expected to look), and projected Statement of Financial Position (forecast balance sheet showing forecast debtors, creditors, stock, fixed assets, loans, tax liabilities and so on).

Once the forecasts have been fine tuned and finalised they will provide the basis for comparing actual results achieved as the financial year progresses.

Forecasts can be as simple or as complicated as the business itself. But it’s important that every business has a plan and detailed financial forecasts are a big part of that plan. Remember “People don’t plan to fail, they just fail to plan”.