As a business owner, it’s increasingly difficult to ride out the changing economic conditions and manage the financial ups and downs of business in 2024.

In fact, half a million businesses have failed since 2020, according to new figures.

Knowing what’s around the next corner would be incredibly helpful. This is where forecasting tools and financial projections can become a real game-changer.

Why your small business should embrace financial forecasting.

Good financial management starts with solid bookkeeping and accounting processes. But your accounts only tell you what’s happened in the PAST – not what will happen in the FUTURE.

Financial forecasting takes this historic accounting data and projects areas like cashflow, operating expenses and revenue forward in time. In essence, what you get is a projection of how your finances may look one month, six months or even a year down the line.

Why is this important?

Let’s take a look at just a few of the benefits of using accurate forecasting to manage the financial strategy and health of the business:

Accurate predictions.

Your forecasting software can analyse your historical data and current trends to provide accurate predictions of future sales, expenses and cash flow. These forecasts allow you to accurately see how your finances will look in the future.

Proactive financial management.

Armed with these forecasts, you can quickly see where there’s a need to boost revenue, manage cashflow or optimise your allocation of resources. In short, this information helps you assess and avoid the big finance pitfalls.

Improved cashflow management.

Forecasting helps you spot any potential cashflow shortages or surpluses. This prior warning gives you time to take cost-cutting action to rebalance cash shortfalls, or find useful ways to reinvest the surplus cash.

Better allocation of resources.

With a deeper understanding of your future financial needs, you can allocate resources like equipment and staff more effectively. This helps to boost growth and expansion, while keeping your finances in a healthy position.

Data-driven decision-making.

With a forecasting solution in your app stack, you have the data, forecasts and reporting needed to make truly informed decisions about your business’s financial future, and to review these decisions on a regular basis.

Talk to us about adding forecasting to your app stack.

There’s a wide choice of financial forecasting apps out there, all of which can neatly integrate with your existing accounting software and business reporting systems.