Financial Forecasting

Why Is Financial Forecasting Important?

Financial forecasting is an essential consideration for any business from small independent companies to global large brands. Covering everything from cash flow management to corporate financial planning, this type of forecasting is an estimate or projection of likely future income. This type of planning also outlines the expected and potential revenue trends plus business expenses.

It should be noted that financial forecasting is different from financial planning, which covers a more detailed way of achieving strategic goals. Forecasting is essentially a view of what is likely to be on an organisation's radar.

How Financial Forecasting Can Help Your Business

Having a business financial plan can only be successful if forecasting has been properly outlined. Without this, essential costs are likely to be missed. Furthermore, companies can find themselves without the revenue needed to progress with changes in operations, such as scaling or reaching new markets.

Below we have included a few examples of how financial forecasting should be used in everyday business activities.

Tax Planning for VAT Bills

One of the ways that tax planning companies like Hysons help organisations is by planning for VAT bills. This is classed as forecasting as the estimated bills due can be predicted based on future business activity. Suitable for both sales and purchase forecasting, having a view of VAT responsibilities is essential for ensuring cash flow can always cover payments due.

Furthermore, forecasting also allows plans for VAT optimisation to be accounted for, such as deciding what tax year to include bigger purchases and sales.

Corporation Tax Planning

Alongside VAT tax planning, considering corporate tax is also essential for limited companies.

Forecasting corporate tax requirements means aspects such as profits, deductions and credits can all be considered within liability planning. Additionally, it also ensures stronger tax compliance to align with risk management planning.

Financial forecasting for corporate tax also helps companies operating in different regions to better manage their assets and costs to ensure that tax is optimised for each area of business.

Eliminate Bad Debts with Business Cash Flow Forecast Planning

Financial forecasting also has the power to help businesses avoid negative debts as cash flows can be managed more effectively. This involves ensuring positive cash flow always outweighs spend so that should issues such as late payments arise, a company is not left in the negative.

Anticipating financial troubles ensures that cash flow health is always maintained, even in times of uncertainty.

Build a Debt Collection Process

Building a debt collection process is also a part of financial planning as it’s an essential activity for a company to conduct should they be owed assets or money. Having a structure in place ensures that debt periods are kept to a minimum and recovery is more controlled.

Our team supports everything from the publication of a debt collection strategy to help activate should it need to be used.

Business Cash Flow Forecast Planning To Avoid Expensive Overdrafts

Cash flow forecasting refers to the practice of understanding the timing of incoming and outgoing payments within a business. It is crucial for businesses of all sizes because it provides a clear picture of the financial status of bank accounts across various operational periods.

Actions include taking proactive measures to mitigate risks, adjust spending, having different accounts available for various parts of business and options for alternative financial funding.

Whilst each of these options may not need to be activated all at once, it allows organisations to have different plans available based on activity.

Strategic Business Funding

Business funding is essential for ensuring companies can progress with operations as intended. Forecasting supporting activity for this ensures that companies can grow financially in line with other strategies. This is how planning aligns with forecasting as it creates conditions for favourable activities which are backed by the right type of financial funding and security.

How Can Hysons’ Strategic and Financial Planning Services Support Your Business?

Hyson's financial planning services are already used by companies of varying sizes and from a range of sectors. By using our sophisticated forecasting software and the skills of our highly trained staff, we can produce accurate and reliable forecasts which elevate any business.

Financial forecast services from our team include the following activities:

• Prepare forecasts for a range of business types, from start-ups to established brands. This comes in the form of financial forecasts and strategic business plans.
• Assist in bank funding in terms of gaining access to funds, managing different cash flows, paying bills, and facilitating the receipt of revenue.
• Prepare budgets, forecasts, and management accounts for established businesses. This is available for companies that we have and haven't worked with previously as our team is able to seamlessly integrate into any business structure.
• Cost 'one-off' projects, such as the construction of a single, substantial asset. This is important as it means companies can scale confidently and not be met with any unexpected financial blocks.
• Review your business's actual performance against budgets and expectations to create a clear view of real-time financial landscapes.

For further advice and information on Finance, Forecasts & Plans please contact us.