At last week’s seminar on Understanding your REAL break-even point, I went through what I call the 5 minute cash forecast.

Cash flow is notoriously difficult to forecast and often long-term cash flow forecasts are invariably wildly out. As a result, we recommend to many clients that they complete a 5-minute cash flow summary at the end of every month.

The principle of such a summary is to start by taking your overdraft facility (if you have one) and adding to it the balances in your various bank accounts (or deducting them if they are overdrawn). This gives you a figure for your current available funds.

You then compare that to the amounts that you “ought” to have available. These are a proportion of the liabilities that are accruing. So for example, if you are two months away from paying your annual Corporation Tax bill then you ought to have 10/12ths of it set aside. If your quarterly rent is due next month, you should have two-thirds available. 

If you have a shortfall on this calculation then this is a good indicator that a cash flow problem is being stored up. It may be that it is 6 months until it hits you but nevertheless you have a good warning system in place. If you do this calculation, you will start to see a pattern building up and in the event of an occasional “blip” you should be able to easily identify the reasons such as a large debtor balance not being settled in normal terms.

Articles about cash flow can be found on our website by clicking on www.a4gsolutions.co.uk/financial/index_cash_is_reality.htm

With the stock market being in its current state of disarray, many people are considering what alternative options are available to them regarding the best place to invest their money.

Pension contributions could still be one of the most tax efficient options for your investment and should not be dismissed off hand.

Many clients are considering making a one off pension contribution before the end of the year, enabling the business to claim an allowable tax deduction and thus reducing the final tax bill, whilst also ensuring that the money is invested in a suitable vehicle that will benefit the individuals concerned.

It is important to note that the payment must be with the pension company before the end of the accounting year for it to be treated as an allowable deduction in that period.  If you have a December year end, it is worth considering now what sort of pension contributions could be made so that you have time to make the payment and for it to be received by the pension company before the end of the accounting period.

If you would like further information please contact our Tax expert on Janice@a4gsolutions.co.uk

Commiserations to senior client manager Mark Goodfellow who plays for non-league Hornchurch came close to knocking football league and full-time professional Peterborough out of the FA Cup. In a frenetic last six minutes of added time with chances at both ends, hopes of a trip to Manchester United or Arsenal were dashed when Peterborough pinched a last minute winner despite a fault-less display at centre-back from Mark. Next year, maybe. 

"Defeat is not the worst of failures. Not to have tried is the true failure" Anon