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Cashflow Planning without a crisis
Cashflow
Planing without a crisis
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Cashflow planning should be a living document in any business. If you only turn your attention to your cashflow forecast when problems start to occur, you’re already on the back foot to start managing the unexpected when it happens. The longer these issues continue, the more exposed your business becomes and further unexpected dents to your cash flow can put your business at serious risk.
It’s important that business owners PLAN FOR a crisis instead of just REACTING to it. Although the specifics of the unexpected event can’t necessarily be predicted, the impact on your business can be. Crisis will happen at some point. You need to be prepared for it and equip your business to be able to ‘ride out the storm’ and ultimately survive. Here’s some thoughts.
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Test your forecasting! Don’t use your cashflow forecast simply for vanity metrics. Graphs and charts always look great when everyone pays on time. What does your forecast look like when only 25% of your clients pay on time? What if this happens for one month, two months… six months? If you haven’t tested those scenarios, do so now!
Don’t get complacent. Don’t be tempted to eat into cash reserves as soon as any cashflow issues ease up, or you think your business is undefeatable. R emain controlled so that you continue to benefit and create a decent cash buffer for when times may be lean again.
3. Don’t file it away. Once you have a detailed cashflow forecast and you’ve tested it, don’t simply file it away! The document should be a living, breathing part of your business. Cashflow planning isn’t just a task to tick off and to revisit on an annual basis. Make it visible.
We acknowledge that the coronavirus outbreak is somewhat of an extreme crisis to plan for, but what we’re seeing is that businesses have failed to prepare for even the smallest of business interruptions.
If you need further support on helping your business to recover visit www.hjsrecovery.co.uk, call 0808 1644 222 or email help@hjsrecovery.co.uk
