What additional steps need to be taken for seasonal businesses to ensure
an optimal outcome?
Many businesses do the majority of their trade during a short period each year. Examples include those in the tourist-sector, Christmas shops and winter-clothes producers. The challenges faced by seasonal businesses are unique.
These steps are a range of advice for seasonal businesses. It starts with cashflow planning - a concern for every business, but a particular problem for seasonal businesses managing a short burst of revenue which must meet their liabilities throughout the year. It also covers financing for seasonal businesses.
Irregular cashflow patterns are one of the most frequent problems faced by seasonal businesses. If most of activity and revenue is concentrated in a short number of months, the company may have difficulties organizing their finances so that they can meet the outgoings they face all year round - such as wages, rent and taxes.
Careful planning is essential to ensure they have enough money to meet their commitments during quiet periods. It's a good idea to:
? carry out a detailed cashflow assessment
? prepare for any potential nasty shocks - through worst-case scenario planning
? monitor and update their cashflow forecasts so they know exactly where they stand ...
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What is the main reason for preparing a cash budget in the master budgeting process? What additional steps need to be taken for seasonal businesses to ensure an optimal outcome? What are the risks associated with inaccuracies in preparing the pro forma income statement and cash budget?View Full Posting Details