The cost of living crisis is a big red flag currently in our world. All business owners or potential business owners need to be ready for the potential crisis coming and cash flow absolutely is King (or Queen).
The brutal truth is that many decent and profitable businesses crash because they run out of cash. A huge number of fledgling businesses don’t get to spread their wings due to cash flow issues.
The good news is that there are things that you can do to prevent this. Things that might not only save your business but will also prepare you and your business for the upturn that must surely come.
Cash Flow Forecast
Build yourself a cash flow forecast! These go from quite simple to incredibly complex, the essential factor is to do one though. You need to know your numbers. You can identify with clarity what the cash position is today and what it will be at specific intervals into the future, enabling you to manage the situation using every available resource.
Cash Management
There may be more that you can do by issuing invoices daily or weekly, chasing debtor payments efficiently, agreeing longer payment terms with suppliers and cutting overheads.
Cash Sources
If you have improved your own cash inflows from the business and yet you still see a shortfall, consider additional sources of funding. This could be by overdraft, loan or invoice finance, or alternative sources including government support where available. What banks really don’t like is being surprised. Give them plenty of warning and a well drafted plan and they will look on your application with a great deal more favour than if you ring up on Monday and say you’re going to run out of cash this week.
Do your forecast with honesty, review your situation without rose tinted spectacles, evaluate your options and then take reasoned action in full knowledge of the desired outcome.
To discuss your cash flow or financial concerns for your business, jump on a free discovery call with us.
