Business Forecasting Part 2

In our last blog we discussed the need for financial forecasting. In this blog we will take you through the main elements of what you need to consider when doing your forecasting.

  1. Sales Forecasting

Ideally project your sales over 2-3 years on a monthly basis for the first year and on a monthly or quarterly basis for the second and third years.  This will also include your pricing strategy and how to price your product or service. Our next blog will take a look at how to price.

The amount of sales you are forecasting will underpin your entire business so be realistic when looking at how many sales you will achieve. Forecast too little and you may not attract the funding you want. Forecast too much and you won’t achieve them!


  1. Create an Expenses Budget

You need to know how much it’s going to cost to make the sales you have forecast.  You can split the costs into materials and labour, which are also known as direct costs, and are part of the cost of sales in the Sales Forecast.  Overheads, which are also known as indirect costs, can be split into fixed and variable costs.  Fixed are things like rent, rates, payroll whereas variable are costs such as advertising and promotional expenses.


  1. Develop a Cash Flow Forecast

Cash is King and needs to be kept a close eye on as even a profitable business can run out of cash if its customers don’t pay on time.  Use your sales forecasts, expense budgets and balance sheet items to create this.  Use a realistic expectation of when your sales invoices will be paid so that you can project cash requirements for paying expenses.  Don’t forget to factor in items such as VAT and tax payments.


  1. Income Projections

This is a Profit & Loss Account. Use the numbers from the first three schedules above (i.e. sales, expenses, cash flow) in order to build this up.

Again, it is good practice to revise this monthly with actual figures so that you can see how the business has performed and alert you to any potential problems.


  1. Deal with Assets & Liabilities

You’ll also need a projected Balance Sheet. This is a snapshot of your business at a point in time showing the net value of the business. There are items in the business which don’t go into the P&L e.g. capital elements of a loan, stock held, accounts payable and receivable, assets such as equipment etc, but which are still part of your business.


  1. Break-even Analysis

The break-even point is where income from your sales matches the expenses going out of the business and every business should know where this is so they can see if the business is viable. The ideal situation is to reach break-even and then grow from there as every additional sale is then contributing towards the profit.


We will be covering some of these sections in more detail in future blogs. However if you want to know more then pick up the phone and speak to Sharron on 01207 509871.

At Westwood Accountancy we are friendly accountants. We won’t bamboozle you with accountancy! We will talk to you in plain English.

So if you’re at a cross roads with your business and want some help with your forecasts we will help you.


Business Forecasting Part 1

Business forecasting should form an integral part of your business plan.

Business planning and financial forecasting may be required for a number of reasons:

  • FUNDING – if you need funding to start up or grow then all lenders will assess your forecasts.
  • LOOKING FOR A BUSINESS PARTNER – robust financial forecasts will show them to join you.
  • SELLING YOUR BUSINESS – a prospective buyer will want reassurance that the business will continue and has potential to make them money.


The forecasts you produce will be ongoing and changeable according to circumstances and should be a guide to running your business.  So, if in the future you feel that you need funding from a bank loan or another source, you already have the documents/plans in place to go and see these people.

When creating a financial forecast, it may not necessarily be done in sequence; there may be an element of ‘jumping around’ between the different sections as the results of one section may cause change to be made to another section.  In fact, you’ll probably find each section will need revising a couple of times until the overall outcome is acceptable to you.

Our next few blogs will take you through some of the elements of financial forecasting.

But if you need our help with your forecasting then pick up the phone and give us a call on 01207 509871.

Sharron will talk to you with plain English. She won’t bamboozle you with accountancy! We’re here to help so if you’re looking for funding for your business or you just feel like you need to get a better grip on your business finances then give us a call.

Time flies when you’re having fun.

As you may or may not know I have just come back from my holidays celebrating my first wedding anniversary. I cannot believe that it is a year since Tony and I got married, it has been such a busy year in the business that time has whizzed by so fast.

Wedding pic

This got me thinking about time and in particular deadlines. If you run a business then you’ll know all about deadlines! I thought I would take a quick moment to run through the main ones if you have a business. If you miss deadlines then some will incur fines. So I cannot stress enough that you need to be on the ball otherwise it can work out to be very expensive.

Limited Company accounts

Unless you are filing your company’s first accounts the time normally allowed for delivering accounts to Companies House is:

  • 9 months from the accounting reference date for the private company; or
  • 6 months from the accounting reference date for a public company.

If you are a day late filing your annual accounts with Companies House the fine is £150, this increases to £375 if you don’t file within 3 months and even more after that. They raised £59.1 million in fines last year. That’s an awful lot of late filing done!

VAT Returns

These are due quarterly and have to be submitted and paid by the end of the month following the quarter end plus 7 days. So for example, if your VAT quarter ends at the end of September then your return needs to be submitted and paid by 7th November.

Tax returns

These need to be submitted and paid by 31 January following the end of the tax year. For example, the 2013 to 2014 tax year ended 5 April 2014. The main deadlines are:

  • Paper tax returns – midnight 31 October 2014
  • Online tax returns – midnight 31 January 2015
  • Final payment of any tax due – midnight 31 January 2015.

Payroll and N.I.

For employers who pay N.I. and PAYE this is due on the 19th of the following month.

The RTI (Real Time Information) submissions for the payroll, which tells HMRC how much PAYE and NIC people pay, must be made on, or before, the day people are actually paid. If it is made the day after payday then it is late, and you could get a late-filing notice and possibly a fine.

If you run a business you need to be aware of all of the deadlines that are appropriate to you. If you get a bit overwhelmed by all the deadlines that you need to know about then get in touch. Here at Westwood Accountancy we keep an eye on the deadlines for you and can help you make sure that you’re organised, and more importantly, not incur fines or penalties.*

Give me a call on 01207 509871 or drop me a line to

*All information contained in this blog correct as at September 2014

Why your business should be budgeting and planning its finances?

Ok so you run a business and some month’s cash is a bit tight. Sound familiar? You might need to look at better budgeting and planning.

What’s a budget?

A reasonable estimate of your sales, costs, profit and cash over a specific future time period.

Why do you need to budget?

  • It will allow you keep a close eye on your sales, costs and probably most importantly, your cash.
  • Knowing what expenses will be due in the coming months will allow you to make sure you have sufficient funds to cover them.
  • It will give you the chance to fully analyse your costs and make changes where necessary.
  • You will be able to track your forecasted sales over a period of time. This will then allow you to see when you will have peaks and troughs in demand and as such you will be able to manage them accordingly.
  • Give you a realistic expectation of profits or losses. If you are forecasting losses you will be able to assess the sales and costs figures and make adjustments accordingly.


If you know you should be doing robust forecasting but you don’t know where to start then speak to Sharron. She can help you understand your business better and work with you to forecast accurately.

Drop Sharron an email on:

Or give her a call on: 01207 509871