Cash flow forecast identifies funding shortfalls

In the “Predictive Accounting Process”, budgets are prepared for each operational activity and key drivers are prepared for the subaccounts relating to debtors, creditors, work in progress, research and development, capital expenditure. The financial implications of the budgets and the various key driver accounts are then reflected in the cash flow forecast.

This is a component of businesses that has a clear concentration on the future. In a larger business, this activity is a joint effort by the CEO and the Chief Financial Officer (CFO). The CEO is the visionary, whilst the CFO’s role is to incorporate that vision into the financial forecasts.

SMEs should be no different. However, most SMEs will not have a full-time CFO. This is a service that some accounting firms and consultancies are able to provide to SMEs.

One of the key indicators that cash flow forecasts reveal is whether the SME is going to run short of money – every CEOs nightmare!

Raising capital from the public is an option that is available to every small company in Australia.

Every company can utilise Section 708 of the Corporations Act to raise up to $2million.

Young companies that were involved in R&D have been given a special advantage to raise capital, as there is an incentive available to investors in the Early-Stage Innovation Company capital raising process.

Other companies with a turnover of less than $25million annually are able to raise up to $5million in a 12-month period from the public, by utilising Crowd Sourced Funding Equity Raising.

Arranging suitable funding is an important component of the “Innovation Journey”.

Towers Business Development can assist you with your “Innovation Journey”. Visit www.towersbusiness.com.au to find out more or call us on 1800 232 088.