5 reasons your business might need cashflow modelling right now

, 2 September 2020

Cashflow modelling business challenges

If you have looked hard at your business in recent months, you might have noticed some uncomfortable truths that you need to tackle. Here are five signs that it’s time for your business to consider adopting a comprehensive, integrated cashflow modelling approach.

It’s been a tough few months for businesses across the UK. The coronavirus pandemic has left many firms struggling to survive, with many having to furlough or even lay off part of their workforce.

What we have found since lockdown is that many of our users have taken the opportunity to work on their business rather than in it. The crisis has enabled them to go back to basics and look at what it is about their business that is working, and what isn’t.

In our recent blog, we looked at why investing in your business now can put you in a great position when we return to something approaching normal.

If you have looked hard at your business in recent months, you might have noticed some uncomfortable truths that you need to tackle. Here are five signs that it’s time for your business to consider adopting a comprehensive, integrated cashflow modelling approach.

1. You’re doing a lot of one-off transactions

You’ve met a client, done lots of work on their behalf, and present your findings to them. Maybe they do what you suggest, and you earn a nice fee for the work.

If your business then doesn’t ever really deal with that client again, is that making the most of the relationship? What if you could engage with the client so they came back to you time and time again?

Incorporating cashflow modelling into your process gives your clients a visual representation of how their finances will look, from now through early retirement into their later years. It makes it far easier for clients to understand how their wealth will be affected over time, and the impact of factors such as tax and stock market volatility.

Showing clients this type of information in a visual way can be genuinely life-changing. And, it can help you transform your earnings from one-off fees to recurring, regular client income as they stick with you for years.

Read more about the power of cashflow modelling here.

This brings us to…

2. Clients are questioning your fees

Are you finding that clients are increasingly questioning the fees they pay? Are they asking what they are getting for their money? Questioning the value of your service?

Cashflow modelling is one of the key ways you can help clients to understand the advantages of fee-based financial planning over commission-based financial advice. That’s because clients become less concentrated on the fees they are paying and more interested in how they are doing in terms of meeting their goals and objectives.

Justifying the fees you are charging is much easier when you can demonstrate a tangible benefit to the client, inspire confidence in them, and visualise this benefit in graph or table form.

We’ve produced a comprehensive guide about how cashflow modelling adds serious value – head here to read it.

3. You only have older clients

If you’ve noticed that all your clients are approaching, at, or in retirement, then the long-term sustainability of your business could be in question.

According to Investment News, 66% of millennials will fire their parents’ financial adviser. So, attracting younger clients, and retaining them for years, could be critical to your firm’s income in the future.

Using cashflow modelling helps intergenerational planning as you can incorporate all family members into the process. It’s a really powerful way of ensuring the children of clients also develop a long-term relationship with you.

Additionally, incorporating cashflow modelling into your processes can save you time, allowing you to take on more clients. As we have seen, it then enables you to develop a long-term relationship with clients, meaning these younger clients could end up generating fees for you for 20, 30, or even 40 years to come.

4. You’re spending hours on complicated calculations

The chances are your clients have some complicated affairs. Perhaps they have contributed to a variety of both final salary and Defined Contributions schemes and you’re having to work out Lifetime Allowance issues?

Or maybe they are transitioning into retirement and want to look at different ways of drawing an income from their assets?

If you’re still using a pen, paper, calculator or spreadsheet for these clients, it’s probably time to consider incorporating cashflow modelling into your process – watch our demo.

If a client wants to look at various options, using cashflow modelling in your client meeting means you can show these immediately. All you have to do is change the assumptions and you can show them a range of options, without having to make an appointment in a week’s time just so you can go away and do the research.

You no longer have to pore over a spreadsheet. At the click of a button, you can show a client a range of scenarios, taking the relevant tax, National Insurance and pension allowance charges into account.

5. Your business revenue has stalled

If you have noticed that your revenue has become static, and that your business is no longer growing at the rate you want, it may be time to reconsider your approach.

Adopting cashflow modelling can help to drive your firm’s revenue in four powerful ways:

  • You can differentiate yourself from your peers, and boost referrals from clients and introducers
  • Increase pitch win success
  • Grow new and existing revenue streams
  • Retain clients for the long term.

Using integrated, intuitive cashflow modelling software can also help to make your business more efficient. It can reduce your compliance burden and make your process slicker and less labour-intensive.

And, of course, improving efficiency means your firm can take on more clients and increase overall revenue.

We’ve produced a comprehensive guide about how cashflow modelling adds serious value – head here to read it.

To chat with one of us about the benefits of cashflow modelling, email sales@i4C.technology or call 020 3308 9448. Or why not start your 30 day free trial?

This article was written by Rob Tedder, Client Cashflow Solutions Manager at i4C.