Your financial statements are different from your financial plan. You should be using your plan as an early warning based on your projections for the coming months, forecasting income and outlays. This way you can plan for the best timing for projects as well as identifying your company’s financing needs and preparing for any future cash flow issues.
Financial planning should start with a company strategic plan. Ask yourself questions about where you want the company to be in the next year and determine what you may need in the future to reach your goals. Do you need to expand? Do you need more staff or equipment? How will these goals affect your cash flow and will you need financing to accomplish those goals?
Once you have a plan in mind start creating financial projections. Financial projections can help prevent unexpected trouble and are simple to put in place. Create a budget for the year and plan for any financial assistance ahead of time so if there is any issues you are prepared. By recording your anticipated income based on sales forecasts and anticipated expenses for labour, supplies, overhead and any planned projects you can prepare for any dips in cash flow. Also prepare a projected income with a profit and loss, statement and a balance sheet projection. Prepare for both negative and positive disruptions to your projections to help you to anticipate the impacts of each one.
Once you have determined your financial needs, secure the financing required to complete them. If possible, contact your financial professional ahead of time and with a detailed plan to make this easier.
Throughout the year, continue to monitor your finances and readjust your plan if you do not remain on target.
If you are looking for assistance in your financial plans, we invite you to contact our firm. We offer consultations with trusted personal tax accountants who are well-versed in the complexities of Calgary’s tax laws and dedicated to optimizing your tax outcomes. Reach out today to ensure that your financial needs are expertly and professionally handled.