Managing Cashflow in difficult times19/03/20
Cashflow has always been an important factor in the success or failure of any business, but in these challenging times, having an effective cashflow strategy is critical.
So what can you do, if you're expecting to have cashflow difficulties?
Here are a few ideas for you to consider:
- Review money owed and estimate the likelihood of collecting these debts and when
- Review cash out and look at which of these can be delayed
- Do we have any assets that can be sold?
- What is the relationship we have with our bank or other lenders?
- What support packages are currently being offered by the government
Have we got the ability to call on family and friends?
Once we have a better understanding of the facts, it's important we take emotion out of our thinking. Worrying does not help and in fact it makes it worse, reducing our ability to think creatively.
Some of the activities that you can then take include the following:
- Can I negotiate a payment plan with my debtors?
- Can I negotiate a payment plan with my creditors?
- What support will the bank give me - you need to be honest and open? Ask for a meeting or a phone call.
- Am I up-to-date with what is being offered from the government? Make a call.
- Are there any operating costs that I could reduce. Rather than firing all your people could we offer part-time work? Can you demonstrate leadership by taking a pay cut for the next two months to demonstrate austerity?
- Produce a cashflow projection and update at least daily with the latest information regarding all of the above.
- Seek help from your accountant and business advisor as soon as possible and allow them to be the devil's advocate on your plan.
These are extraordinary times we find ourselves operating in, and it's important to remember we are all trying to navigate a path through something most of us haven't experienced before.
As always business plans help, and a cashflow planning strategy is no exception.