Help give confidence to the Bank
When you want to apply for funding, certainly the lender wants to see your financial estimates to determine the company’s future ability to repay loans. Your estimated cash flow must contain your estimated cash income for the time period you are collecting, not credit, and your cash disbursements per month.
By reconciling these two numbers (extracting expenses from cash income) you will have several assumptions to play. Estimating the cash flow of a business is not an easy task, where you have to calculate investment expenses and net cash inflows annually after a business is run.
Because of the many variables contained therein, as well as the individuals involved in it, making cash flow forecasting becomes complicated so errors in estimation become inevitable. For this reason, cooperation between the finance department and other parts of a business is needed to avoid bias in forecasting.
Funds Function in Managing Cash Flow
The most important thing as a basis for managing cash flow is to understand the function of the funds you have, whether to save or invest. Simply put, the function is divided into 3 parts which include:
Funds are used to meet operational needs and can be disbursed quickly without the risk of reducing initial investment.
Funds are held to avoid the risk of a decrease in purchasing power in the future and can be disbursed quickly.
Existing funds are used to increase wealth in the long run.
Making a business financial plan clearly will help you a lot to avoid the risk of loss. By applying cash flow forecast, you can find out cash flow clearly and in detail. So that it can be adjusted between cash and the risks to be faced and you can make the right decision.
In addition, to help the cash flow report process you can use the help of accounting software that can simplify each process. One software that can be chosen is Journal. Journal of online accounting software, with the cash link feature will help you to find out more quickly the estimated money in the bank by way of reconciliation.