With so much uncertainty looming around the impact of the UK’s exit from the EU, there is a real need for SMEs to take a close look at their cash position and cash management approach.
There are endless examples of organisations that have neglected this aspect of financial reporting, resulting in catastrophe. A robust budget and cash flow forecast can help to avoid pressure points.
Improving your organisation’s cash outlook
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Many organisations see financial forecasting as a stand-alone practice. However, this should be used as a tool for self-improvement. The ability to predict which costs are to increase or which are to become a larger proportion of total costs should assist in focusing attention on inefficiencies.
A review of an organisation’s systems and processes after producing forecasts should be undertaken to look for any of the following:
Seek, listen to, and heed advice
Management accountants are likely to have the necessary skills to perform such a forecast but it often helps to obtain an opinion from an objective party. Internal audit functions are not practical for many SMEs but an external provider can provide the function of internal audit and assist in bolstering the reliability of forecasts and systems, whether on an ongoing or ad hoc basis.
By Alan Sanders, Audit and Assurance Manager