My experience of working with business owners and directors over the years (in good times as well as bad) has proved that a calm, well-structured approach to cash flow management has always provided the best chance of a successful outcome.
The process will help identify urgent short-term measures as well as enabling planning for the medium to long term security of the business. I see cash flow management as a tool to help you control your responses to current circumstances and an opportunity to review your business in detail to create strategies for the future. Different people will have different personal and business objectives and it’s vital that yours are taken into account in developing your response to the current situation.
Here are some straightforward things you should be looking at if you wish to continue to trade.
Have a plan and monitor progress
Create/update cash flow projections; these will be a critical tool
You may wish to prepare cash flows under different “what if” scenarios to help you plan
Many businesses will need to convert traditional monthly projections to a weekly or even daily basis
Focus on the cash-to-cash conversion cycle and reduction of working capital requirements
Ensure your financial records and reports are kept up to date so that you monitor profitability, overheads, stock levels, and debtors and creditors balances on a timely basis
Generate cash
- Government help: Take advantage of the business support offered by the Government. We’ve produced a summary of the current business support available here
- Trading opportunities: Can you adapt your business model to serve existing or new customers in a different way? We’ve seen some wide thinking initiatives by some of our clients. Consider alternative ways to generate an income stream
- Debtor management/customer relations
- Reduce stock
- Minimise work in progress
- Sell surplus fixed assets
- ‘Sale and lease back’ fixed assets
- Sell investments not held for trading purposes
- Obtain tax refunds/incentives
- Insurance claims
Coming soon
- Look out for our next blog which will cover:
- Saving cash
- Finance options
- Alternatives to trading
Need help?
There are so many things to consider under each of the headings above. In my experience, many clients have found it useful to work through each area with us, receiving the benefit of an ‘outside view’ to stimulate thinking, helping them to develop and implement practical strategies.
We’d be happy to help you in the same way. Please get in touch with me or your usual MHA Larking Gowen contact at [email protected].
You can find contact details on the Our People section of our website.