Before your business borrows money, you need to know your current cash flow. You also need an accurate cash flow projection, which is made possible by the latest accounting software solutions.
Can Your Business Afford to Borrow Money?
Let’s say your business is like many and has periods of high revenue and periods of low revenue. Likewise, your business expenses ebb and flow, sometimes consistently and other times based on factors you can’t predict.
Given all that uncertainty, can you afford to take out a business loan right now? Or in a month? You don’t need a crystal ball to answer those questions, although it may feel that way. Let’s talk about what you do need.
Know your actual cash flow
The first step is to know your actual cash flow, including both what’s coming in and what’s going out each week and month. Many businesses track and manage cash flow with spreadsheets. That may seem like the right tool at first, but as you’ll see, it can create problems when it comes to the next step of forecasting future cash flow.
Forecasting the future
To make a big decision, like whether to take out a new business loan, it’s not enough to know your current inflow and outflow. You also need to forecast your future cash flow. That’s a struggle for many small businesses. Along with being time-consuming to build, manually created spreadsheets sometimes have errors and version control issues, and they can introduce security risks.
These issues are why so many businesses are transitioning to automated accounting solutions that use artificial intelligence, machine learning, and other advanced technologies. It’s not simply that modern accounting systems provide more accurate cash flow forecasts but also that they do so more quickly, collecting data automatically from across your business to give you the insights you need in a fraction of the time.
Can you afford that next loan?
Our Virtual Accounting Solutions team can help provide the solutions you need. Cash flow projections can be provided in a timely manner, not weeks later. We can also create multiple what-if scenarios that you can share and discuss securely with different teams across your business.
With our outsourcing solution, all your plans, budgets, and actuals can be synchronized, so version control is no longer an issue. And with more accurate forecasts, you gain more visibility and deeper insights into big decisions—including whether you can afford to take out a business loan.
Get the support you need
BST offers a broad portfolio of accounting and auditing, tax, consulting, and wealth management services, as well as valuation, forensic accounting, and litigation support. Our Virtual Accounting Solutions include everything from managing daily accounting operations to producing reports and collaborating on strategic planning and budgeting. As you consider whether to take out a loan or make other important business decisions, we are here to serve as your trusted advisors, providing continuous consulting to support every step of your journey.
