The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Vanessa Williams
Published on

nz money 100s 50s generic n2In 2005, an accounting colleague of ours undertook a survey of 1,500 small and medium businesses asking what additional help they needed from their accountant.

At that time, 58% of the respondents said that they needed more help from their help in managing their cash flow.

We suspect that, 10 years later, that number if anything would be higher.

And yet so few businesses have a live, working, cash flow and budget. Why is that the case?

The feedback we hear from many business owners is that it is difficult to do in a meaningful way. Specifically, to create a three way forecast including P&L, cash flow and balance sheet is not a trivial exercise. 

We like to approach cash flow a little differently at Alliotts. For example, imagine this scenario being presented to you as a business owner:

  1. Our review of your past three years’ business performance
  2. Have you outline some initial targets for the next 12 months
  3. Ask you this critical question – how are you going to achieve those targets?
  4. Go into some more detailed planning to determine what needs to be done to move towards the targets
  5. Ask you what attention needs to be paid to seasonality and non-P&L related cash demands on your business (e.g. capital expenditure, owners’ drawings, etc)
  6. Recommend a cash management program to ensure that those needs can be met within the plan.

Our recommended cash management program might then include a cash flow planning meeting, the creation of the three way forecast, weekly monitoring and alerts, monthly or quarterly meetings and accountability around achieving the plan.

It is a very different proposition than trying to ‘bosh out' a cash flow forecast on a spreadsheet which stagnates for 12 months.

So how do we meaningfully and accurately prepare your forecast? Every business owners needs an efficient way to carry out this part of the process.

That’s why we have spent the past 12 months implementing a web-based forecasting tool called PANALITIX. The key to this is our ability to connect with your business’ online accounting system so that we have real time information against which to monitor your forecasts. 

This is a great example of the power of cloud technology. The most critical realisation is that technology is only a tool, and without embedded content and your human interaction skills, nothing changes - and that's where we come in.

Alliotts can provide you with accurate, timely and informative cash flow forecasting tools allowing you to develop action strategies to improve your bottom line. Call us in Auckland on 09 520 9200 to get started.

Topics: budgeting business performance cash flow Panalitix