Understand your business performance with Three-Way Cashflow Forecasting
Understanding how your organisation performs goes a long way to having a successful business model. But to do that, you can’t guess – you need to know. Enter Three-Way Cashflow Forecasting.
Three-way modelling is invaluable as it gives business owners first-hand insight into the impact of decisions through forecasts that detail their future impacts. These impacts can be positive or negative, allowing you to firm or change your decision based on the anticipated outcome.
A three-way forecast combines three key financial reports – your Profit and Loss (P&L), Balance Sheet and Cashflow reports – together into one neat little package. It then gives these reports greater credibility, allowing you to predict your future cash position and financial health of your business.
Along with helping to predict outcomes, three-way forecasting can also assist in a number of different scenarios, including:
- Applying for bank or investor finance. Banks, in particular, will use three-way forecasting as a tool to gauge a business’ future performance and lending ability
- Due diligence when considering business purchases
- Considering potential new business scenarios, including the positive and/or negative results
- Negotiating payment arrangements with the Australian Tax Office or other creditors
Not only will three-way cashflow forecasting help improve the level of financial management and control within your business, but figures may also be uploaded to give you comparisons of actual to budget. Any deviation from budgeted figures will be flagged, allowing you to intervene and take action before it becomes an issue.
If you wanted more information on how to set up a three-way cashflow forecast for your business, or after general advice, feel free to contact our friendly team at AMD.