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Cash Flow Forecasting for Retail Store
This case study examines a Retail Store faced and resolved their challenges with Cash Flow Forecasting.
- Client
Retail Store
- Category
Financial Planning & Analysis
- Location
Hong Kong
Overview of the Case
Our client, a retail business, was seeking assistance with forward-looking financial forecasting. With store renovations, new equipment purchases, and lease renewals on the horizon, they needed a comprehensive understanding of their future cash flow.
The company’s existing accountants had been providing backward-looking forecasts that was generated by the accounting system but were struggling with the forward-looking projections that encompassed Profit & Loss, Balance Sheet, and Cash Flow. That’s where we stepped in.
Our first task was gaining a deep understanding of the client’s business operations and potential ‘What If’ scenarios. We spent time analyzing the intricacies of their business model, the sales data from their POS system, and the potential costs of their proposed changes.
Utilizing our advanced systems, we created detailed models based on this data. These models provided the client with three scenarios – best case, realistic case, and worst case. Each scenario incorporated varying sales projections, renovation expenditure, lease payments and the timing of rental deposits.
The client sought insights on lease options, considering factors like space size, store location, renovation costs, and potential revenue from new store layouts.
The results were eye-opening for the client. They were able to see the direct impact of their decisions on their cash flow, giving them the insight needed to make informed strategic decisions. Whether it was the effect of higher or lower renovation spending, store configurations or the implications of rental deposit timing, the client now had a clear vision of their financial future.
In conclusion, our forward-looking cash flow forecasting enabled the client to make strategic decisions with confidence, ensuring their business stays profitable while undergoing significant changes. The client was able to understand their future financial position better and make informed decisions to steer their business in the right direction.
