Whilst none of us truly knows what the impact will be over the next 4-8 weeks, or how long the impact will be felt beyond this initial period of the Coronavirus pandemic.
One thing that is certain is that in these times of both personal and economic uncertainty, the need to forecast and plan for the future is very important.
From a business perspective, consider now the mechanisms you have to try to forecast this impact so as to allow you to plan in advance. But don’t just look at your sales, cash is king in these times and the way money flows through your business is not always representative of your Profit & Loss report.
We recommend a rolling 15 week cashflow. 15 weeks ensures your next quarters significant expenses such as your BAS, Super etc are always accounted for, along with the immediate cash requirement after that payment.
Once you have a forecast in place, be sure to update it regularly as it is not a set and forget task. The current situation is changing rapidly and dependent on your industry (retail, hospitality, event hire etc) the impact will likely be changing rapidly and has the potential to get worse before it gets better. You need to be running sales scenarios and ‘stress testing’ your cashflow & business model. If you can establish the potential cash impact now, it will allow you to take action and begin discussions with the ATO, banks or seek alternative funding options as required.
7 Cash Flow management Tips:
Talk to your bookkeeper and make sure your accounts are up to date and stay up to date, you will want to be working with the most recent and accurate information.
- Increase momentum and activity with regards collecting your receivables. Especially on C & D grade clients, whilst opening-up transparent communication with your A & B graders – we need these customers in the future.
- Incentivise early payment.
- Negotiate with your own suppliers to arrange extended credit or payment plan options.
- Review your overheads/expenses and cut all non-necessary spending in the short term.
- Review your staff/team utilisation and open discussions now with regards to potential stand downs on paid and unpaid leave or even redundancy.
- If you have debt, keep the lines of communication with your financiers open and be prepared to negotiate with them, this is where you forecasts can come in very handy.
- Most of all, have a plan. Take purposeful action and don’t put your head in the sand.
If you would like to discuss setting up a cashflow forecast, or require assistance talking to the ATO, your bank or other funding partners, please contact us now or click to book online for a confidential discussion.
