Drafting a cashflow forecast is a vital part of your application as it demonstrates that you have thought about your projected income and have carefully considered the costs that will apply to your firm. Remember the monthly fee income you include here will need to link back to the pricing analysis you have included in your Business Plan. Think practically about when funds will be received – will you be able to get your first bills issued and paid in month 1? Probably unlikely, so it is better to budget on a worst-case scenario, that way you can be really pleased when you improve on your forecast.
Not only do your income figures need to be realistic, your expenses figures need to be accurate, so now is the time to be gaining quotes for things such as Professional Indemnity Insurance (Stage 8), Case Management Systems, leases etc. But do not make such purchases until your firm has gained “Provisional Authorisation”.
Doing this should hopefully demonstrate the financial viability of setting up your business. Thinking about back up funds is also sensible to do now just in case work does not come in as planned.
We suggest a 13-month cashflow as this will cover the next set of regulatory fees and your PII renewal.
A cashflow template and guidance on drafting your cashflow forecast can be found at the following links:
Like your business plan, there are other sources of guidance that you might want to use:
- Your bank should have a business section that will have guidance and templates
- The GOV.UK website provides a link to cashflow templates
- If you are going to use an accountant, they will have experience of putting these together
