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5 forecasting challenges your clients face

23rd Aug 2023
Brought to you by
Futrli by Sage logo
Futrli by Sage offer prediction software solutions for both small businesses and accountants. Let...
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If there’s one thing that all small and medium-sized enterprises (SMEs) should prioritise, it’s their cash flow. Generating a positive cash flow allows SMEs to keep the lights on, pay staff and suppliers, navigate turbulent economic waters, and take advantage of potential growth opportunities. However, having a negative cash flow can curtail so many aspects of your clients’ operations.

5 forecasting challenges your clients face | Futrli by Sage | Image of blocks with the numbers 1 - 5 on them
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This is where cash flow forecasting comes in. By creating forward-thinking cash flow forecasts, SMEs can peek into the future, identifying potential stumbling blocks around the corner and allow them to plan accordingly. Many SMEs aren’t performing them though… and this is where you could step in.

Let’s examine 5 common cash flow hurdles that SMEs face before explaining how accountants can help them overcome them.

1. Time

There’s only one commodity that you’ll never get back: time. SME owners know this all too well. They’ve always got 1,001 things to attend to, and it seems like there’s never enough time in the day. From generating new leads, to providing stellar customer service, to hiring new staff, SME owners are always up against the clock.

This perennial time pressure has a profound impact on entrepreneurs. Indeed, research examining Swedish SME founders states that “... time pressure is a factor reducing positive emotions and amplifying negative emotions, such that it has a negative relationship to emotional wellbeing.”

Time-pressured SME owners/employees might therefore believe they simply don’t have the time to conduct cash flow forecasts - especially as they’re not accountants. Manual cash flow forecasting methods are incredibly time-intensive. SMEs have to find their company’s extensive financial data (which is often spread in multiple systems), manually plug it into spreadsheets, and then wade through the results. This is valuable time that SMEs could otherwise spend on growing their business.

Some of your clients may not even know what a forecast is, let alone how to perform one themselves. The time you can save your clients by taking on forecasting responsibilities has immeasurable value.
 

Every business owner wants to know what their cash flow is.

Paul Clarke, Co-Founder, Ookkee 

2. They don’t understand the benefits

SMEs often fall into the trap of believing that cash flow is tomorrow’s concern. They’re busy with other things, so they don't see why they should waste precious time today worrying about what may happen tomorrow.

Adopting such an attitude is a catastrophic mistake. By getting a firm grip over their cash flow, SMEs can fuel future success. They can identify opportunities to grow, realise when finances might be tight, and plan accordingly. They’ll run a predicted business and avoid nasty surprises—whether shock tax bills or lacking the finance needed to keep the lights on when a customer pays late.

Use your compliance conversations to communicate the benefits of taking a deep dive into their financial data and generating these forecasts for them. Your clients can’t ask you for support, if they don’t know what they are asking for.

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3. Incomplete datasets

Your clients’ excel-based templates aren’t just static—they also rely on incomplete datasets. For example, they don’t account for journal movements, which significantly skews predictions.

You can leverage technology to provide cash flow forecasts that are all-encompassing, rigorously analysing every single piece of their company’s financial data through tech solutions grounded in the source data.

4. Errors

Manually entering data into spreadsheets is an error-stewn process. Ever made a typo? Of course you have! Except, an accidental mistake can throw your clients’ cash flow forecasts entirely out of whack, meaning they gain wildly inaccurate cash flow predictions.

Take on the responsibility of forecasting for your clients by leveraging your teams’ expertise and the tech solutions of your firm.

As William McClelland, Managing Director of Euro Hostel, states, “Prior to moving to Xero and Futrli, I was using Excel spreadsheets. They weren’t reliable and would crash, add daft little formulas here or there… When I was presenting to the Board, my cash flows were wrong, and all sorts of nonsense came out in the figures. It was an absolute nightmare! Excel is a brilliant bit of software and it’s great for what it does but when you get to a certain size, obviously it can’t cope.”

5. Not using Futrli

I've heavily recommended other accountants to use Futrli for when they need to do forecasting or modelling-based support for clients.

Craig Seddon, Partner, Westcourt

Here at Futrli, we empower accountants and bookkeepers to take a different approach to cash flow forecasting. Our platform uses an advanced algorithm to offer detailed cash flow predictions, showing you how much cash your clients have in the bank at any moment throughout the next 36 months.

Connect directly with your accounting software to automatically analyse every single financial data point from the last two years. No more manual data-entry means you have more time to focus on other matters, while also eliminating the likelihood that errors will creep in. Gain complete predictions for the next three years in just seconds.

What’s more, we go beyond the numbers. Click on each prediction to see our rationale (i.e., why we came up with that figure). Play around with your numbers, conduct financial dry runs to see the impact of your clients’ major decisions. How would hiring a new employee impact their cash flow for the year? What would happen if they lost their largest customer?

When you sign up for Futrli it automatically pulls through the data. It's like a plug-and-play system. Instantly you have your cash flow there created for you already. It is based on what's happening now and shows you what it predicts is going to happen in the future.

Laura Day-Henderson, Founder, More Than Bookkeeping 

 

Go beyond static, inaccurate, inflexible cash flow forecasts. Gain rapid insights that spell out your business’s financial future and run a predicted business. With Futrli, you’ll have your very own financial crystal ball. Identify challenges ahead of time, make the necessary plans, and wave goodbye to nasty surprises.

Start a free trial of Futrli today