Is there a difference between cash flow projection and business projection? If so, what would you say it is?
Business projection can mean anything, but the cash flow is literally the ins and outs of your bank account. It’s the most important information that any business owner should know, so I wouldn’t even suggest going and getting me to write you a cash flow plan. It needs to be a collaboration. I can help you write a cash flow plan, and I can ask you the right questions. I can steer you in the right direction, but ultimately, if I just came to you with a spreadsheet and said, “This is your cash flow plan,” it wouldn’t mean anything to you. You don’t know how we’ve got there. We don’t know what influences a cash flow plan.
As a business owner, I think you really need to know that, so it’s a collaborative process of working together and using our expertise to steer you to make sure your cash flow plan is accurate and reliable. I hope that helps. We’ll go from there. We’ve got Blair on YouTube live feed. When you do cash flow, what about expenses you don’t know about e.g. replacement of equipment. You have no idea which month those expenses are incurred in. Hi Blair. You don’t. However, a cash flow plan shouldn’t just be a document you make on day one of the business and not use ever again.
We use Float in our business to do our cash flow. My daily process, okay, as a manager of my business, is to log into QuickBooks first thing in the morning, I reconcile my bank, normally 5, 10 transactions maximum a day. I then turn on Float, refresh the figures, and I can see what’s happening. Then if a team member rings me at 11 o’clock this morning, and says, “Johann, I’m really sorry. I’ve dropped my laptop. It’s broken. I need a new one.” I can go into my cash flow plan. I can add the cost of a new laptop into it, and I can see what it’s going to do to my cash flow up to the next three years.
A cash flow is a live document. It’s not something that just done and you leave it. It’s a live, moving, breathing document, or app in our case, where you’re constantly putting in new figures. Because just in the last month, we’ve employed two new staff. We’ve started delivering a new service to our clients. [inaudible 00:31:57] new software’s. If I didn’t adjust my cash flow plan every time, like when I did a month ago, we’d be completely out of date by now. Yeah, it’s a moving document. Once it’s done, it’s not done. Keep going with it. Keep updating it. That’s why it’s really important to potentially move from a spreadsheet to using QuickBooks or Float, because a spreadsheet becomes out of date instantly.
As soon as you’ve had the £10 coffee from somewhere that you weren’t planning, that’s gone. Your spreadsheet’s out of date. Cash flow and QuickBooks, though, knows you’ve spent £10 on coffee that you weren’t planning on, and it just… the cash flow, because you spent it on your bank card. Then, because QuickBooks knows about that expense, Float knows about that expense, so you’ve got a constant live cash flow tool, and you can always see what the impacts are with different scenarios and stuff. Yeah, just keep updating it. Don’t just think, “I’ve done that. That’s a job ticked off. Leave it,” because, yeah, you’ll soon get into trouble because you’ve not got a reliable cash flow then.