Useful Articles

Forecasting and Management Accounts

by George Granville on December 12, 2014

Forecasts are an essential part of the financial planning for your business. Drummond can work with you to prepare forecasts that run over the next one to three years. We will include in these forecasts as much detail as is appropriate to where you are in the business cycle and the complexity of your business.

Sales forecasts will largely be prepared by you the business operator. However we will review these with you and make sure the timings are realistic and that suitable provision has been made for slippage and sales falling away

Drummond can prepare Cash-flow statements showing your cash balance and cash-flow patterns for the following 12 to 18 months. The cash-flow statement will identify whether you will have sufficient working capital and will take into consideration key factors such as the timing of income and outgoings such as salaries, VAT and PAYE and loan repayments.

We can incorporate ‘what-if’ scenarios into the cash-flow to demonstrate the effects of over or under achieving on your sales targets or what happens to your working capital requirements should you increase the size of your payroll for example in order to meet those targets.

Working with the information from the Sales and Cash-flow forecasts Drummond can provide you with projected Profit and Loss Statements and Balance Sheets. Alternative Projections for the same point in time can be prepared using the different scenarios allowed for in your cash-flow forecasts.

Drummond’s financial forecast looks at where a business will be in the short to medium term against a given set of scenarios. These different scenarios may include any combination of an increase or decrease in sales as well as increases or decreases in overheads or costs of goods sold.

Using cash flow forecasts, projected profit and loss statements and balance sheet projections can be prepared. By utilising these reports your business will be equipped for more detailed projections on further specific areas of the business.

Drummond can formulate these forecasts for your business so that you are able to plan and prepare for future possible outcomes. With this information you will be in a position to get your business financial requirements in place in advance, before you have cash flow shortages.


George is the owner of Drummond LLP and has many years experience in book keeping, accountancy and a range of financial services for businesses of all sizes. If you've got any questions as a result of the issues raised in this article please do give George a call on 01752 71 03 55.

George GranvilleForecasting and Management Accounts

Join the conversation