Note: This blog first appeared on the NCACPA website.
Ready for 2021? Insights into current cash flow are more important than ever for creating an accurate forecast.
If revenue was lower than anticipated at your business this year, you're not alone. But if you were among the fortunate ones whose business remained open or only had a brief disruption, you have an opportunity to regroup and get a fresh start next year. And it all starts with examining your current cash flow.
Understanding the Numbers
For any business to succeed, it must have enough cash available to pay expenses, bank loans, taxes and salaries and to purchase whatever inventory and equipment is necessary to function effectively. That's why the kind of disruption in cash flow that many businesses suffered this year has been so unsettling. Some organizations suddenly found themselves unable to pay their bills.
If you're in that category, now isn't the time to panic — that's never a good approach. But it is the time to apply a sense of urgency and figure out a way forward in this new financial reality.