Cash-flow’ is one of the biggest challenges that business owners require business advice about – and with good reason, as it’s generally the venting point for issues like:
The list of issues isn’t exhaustive, but the end result is the same – things feel tighter than they used to. So what can you do about it?
I’ve always advocated the motto of “prevention is better than cure” and I know this won’t cover all eventualities, but it is a good starting point, and for those of you who have read previous articles, we are trying to minimise the OSINTOT Syndrome (oh sugar I never thought of that).
Most business owners I’ve ever spoken to are filled with dread at the prospect of a cashflow forecast – from either the thought of doing it, or the cost of paying someone else. But, having a good idea of your cashflow needs (even if it’s just for the next 3 months) is an absolute necessity if you want to remain focussed on business profitability rather than being blind-sided by a lack of money – if it can be avoided.
If you are not good at this sort of thing seek help.
If you are able to DIY, get someone to check it over for you, e.g. your accountant, business advisor, bank manager. This will provide some challenge to your assumptions and make sure you have tested it, with some “what if” flexing included. And don’t forget in most cases, cashflow is a permanent need; it’s just the size of it that changes. Once you’ve worked out what the shortfall is, the next stage is how to plug the gap.
There are quite a few options, and typically it will come from one of (or a combination of) the following:
These could include:
Even if your cashflow is strong, these simple measures are good best practice and can improve your cash position even more. This might help your purchasing power, and give you the edge over your competitors.
With the Christmas and New Year period soon upon us, the excuses for late payment go into overdrive and cashflow issues will affect most businesses over the next month or two. So take my advice, anticipate your shortfall, add in a margin for the unexpected Christmas delays (that happen every year!) and plan how you will fund it now; don’t wait, prevention is definitely better than cure.
At Frost Group, we want to make things as easy as possible for you. That is why, if you can’t come to us, we’ll come to you. We operate face to face, nationwide meetings, wherever is most convenient for you.