I’m focusing on cash flow – as you know, it’s my hot topic. With the downturn in the economy and the uncertainty post-COVID, it’s really important that you plan ahead and, at the very minimum, I suggest preparing a cashflow forecast for the next twelve months.
Cash is queen!
Once you prepare your forecast, you’ll be able to see how things are looking if you carry down your current path and everything stays the same. It will identify any ‘cash gaps’ you may have – you will need to work out how your business is going to cover these lean periods. If it’s purely down to timing, then you may be able to work around this. If it’s a shortfall that is not going to be recovered, then it’s time to steer your ship on a different course. You have the information and now you can prepare and act accordingly.
You may have money in the bank and feel quite comfortable. But, have you thought about all the payments you have coming up soon?
Do you know how long it is until your business will run out of cash? Are you hoping for the best? As I’ve said before, hope will not pay the bills and put food on the table. Many business owners don’t understand their finances. You have to get over this fear. Your accountant wants you to thrive – don’t be afraid to have a conversation with them about your finances. It’s important that you understand as your business will be in so much better shape once you do.
Be realistic when preparing your cashflow forecast – let’s start with the worst-case scenario and then put plans in place to improve the results. You may need to look at:
- cutting costs;
- bringing in extra sales from new products and services;
- repackaging your services;
- getting paid sooner
Once you are armed with the true financial picture, you’ll be able to get down to helping your business thrive and survive.
Think about all income, costs, loan repayments, staff costs, deferred payments. Remember to include capital repayments, corporation tax, VAT, plus any amounts you deferred with HMRC – these will become due later this year. Get it all down so nothing gets forgotten.
What to do now
Don’t delay – speak to your accountant about preparing your cashflow forecast. If you need more help or you have any questions, I’m here to support you and there are lots of ways to get in touch – by email at email@example.com or on 07970 314907. You can also find out more about my services here.
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