Home | Contact | Advertising
Small Business, Information, Resources, Articles - SmartBiz.com
Members Login:
Sign Up Forgot?
SALES & MARKETING
Marketing Online
Email Marketing
Search Marketing
Selling
PR
ONLINE BUSINESS
E-Commerce
Website Creation
Productivity
Accounting
CRM
Web-based Software/SaaS
BUSINESS STRATEGIES
Case Studies
Smart Answers
Videos
Podcasts
Smart Blog
Human Resources
Management
BITS & BYTES
PCs & Online Equipment
Mobile Computing
Security/Business Continuity
Telecom/Office Networks
Small Business Products
FORUMS & RESOURCES
Free White Papers
Tools and Calculators
SmartBiz Forum
Legal & Business Forms
News Feeds
Featured Webcasts & Videos
Franchise Offers


 
SMALL BUSINESS AND STARTUPS INTERNET TECHNOLOGY RESOURCES
Search SmartBiz:
Forms and
Downloads
Free
White Papers
Special
Offers
SmartBiz
Blog
Free Email
Newsletters
Finance
Cash Flow Forecasting Comprises 8 Elements
Email ArticleEmail Article
Print ArticlePrint Article
Increase Text SizeIncrease Text Size
Decrease Text SizeDecrease Text Size
Del.icio.us
Digg This
Bookmark and Share

By Lawrence W. Tuller

1. Economic assumptions. Any cash flow forecast must be based on the preparer's estimate of such macroeconomic factors as inflation rates and interest rates. Projected market conditions are also extremely important. The introduction of new competitive products, demographic changes, projected government actions affecting site location, market growth, impact on the continued growth or survival of the company must be clearly stated as part of the forecast. Assumptions about sources of supply, projected results of labor contract negotiations, and changes in government regulations (such as tightened EPA restrictions) should also be reflected.

2. Sales forecast. A sales forecast should recognize both volume and price changes from historical levels. It should also incorporate probable variations in product mix, market trends, new product introductions, and potential competitor actions. Companies that manufacture products to customer order should forecast from the order book, order backlog, and production cycle rather than from historical shipments. However, historical receivables turnover ratios can be used to project cash receipts.

3. Purchase forecast. The purchase forecast should reflect the same variations in product mix as the sales forecast. It should also reflect inflationary changes in the pricing of at least major items and preferably all purchases. Companies that stock invetory for resale should base purchasing time lags on historical inventory turnover. Those that buy materials to customer order should incorpate the lag/lead time required by the production cycle.

4. Payroll forecast. Supervisory and direct labor payroll forecasts must include anticipated wage rate and salary increases. The projected number of employees should be used as the basis, rather
than a straight extrapolation of historical payrolls. All fringe benefits should be included, taking into account expected increases in federal and state tax rates, worker compensation rates, group health insurance rates, and potential new pension plans. All salaries to the owner/manager should be excluded.

5. Nonpayroll operating expenses forecast. The forecasted expenses for utiltiies, lease payments, telephone, operating supplies, insurance, maintenance, professional fees, and so on should be based on historical averages. Such averages can then be factored up for expected inflation rates. Obviously, if facilities are added or deleted, historical data must be adjusted accordingly.


| 1 | 2 | 3 | Next page »
Add a Comment View Comments
Small Business Home

SmartBiz Shop
Promotional Items with Your logo
 
     
 
Smart Services
Spacer
Spacer
Spacer
Spacer
Add Your Logo Now
Spacer
Get Your Business Online
Build a Website Host Your Website Market Your Business Online
Business Form Downloads
Legal Forms Business Forms
Smart Forums
Recent Postings
Stimulus or "Pork"ulus?
Blog: How Do You Know What Insurance Is Right for Your Business?
If Layoffs Are Necessary, Protect Your Business
Blog - Do You Have Email and Internet Usage Policies in Place?
MORE
Home | Contact | Advertising
© 2016-2018 SmartBiz. All rights reserved. Privacy Statement and Terms of Service
Small Business Home | Business Tools | Online Business | Bits & Bytes | Sales & Marketing | Business Strategies | Forums & Resources
Email Marketing & HTML Email Driven By: Hosted By:   Design By:
Email Marketing
 
XML LogoRSS Logo
Receive our stories via SmartBiz XML/RSS feeds.
Include our stories on your website through SmartBiz javascript content feeds.