A run-down of the benefits to thinking short term and long term.
Short term – weekly or monthly
Purpose:
- To determine short-term cash position.
- To plan the amount of cash that can be put in a short-term investment account (money markets for instance).
- To estimate working capital requirements.
Long term: Annually
Purpose:
- To show how much cash will be needed to run the business in the coming year.
- To determine where the cash will come from.
- To determine seasonal variations in cash flow.
- To estimate annual borrowing requirements, ability to make repayments.
- Supporting information for loan application.
Long term: Three to five years
Purpose:
- To support strategic planning.
- To determine equity needs.
- To estimate borrowing requirements.
- Supporting information for raising equity capital.
Category: Business
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