If the global pandemic has taught us one thing, it is the importance of cash. Knowing what your cash position is helps drive decision making and can be the difference between whether you survive a crisis or not.
Use a short-term cashflow forecast
Using a rolling 13-week cashflow forecast will help you to understand the impact of any potential disruption on your business. Once you have set up your cashflow forecast, add in the expected payments from customers and the supplier payments that will be due during the period. This will help you to establish cash requirements over the next few weeks.
Use forecasts as a decision-making tool
Devising forecasts with different scenarios will help you understand what your options might be.
Consider the impact of any delays in the supply chain
There may be delays in obtaining goods as the UK gets used to new importing and exporting procedures. This may impact on your supply chain and your ability to complete your work in progress. Factor in any potential delays into your cashflow and ascertain where the pinch points are likely to be.
Start to look at the longer-term position
Preparing a longer-term cash flow forecast will help you understand what additional funding requirements you may need. Consider the impact of any deferred payments, including VAT and tax liabilities, and make sure any payment holidays and their subsequent repayments are included in the projections.
Review your debt obligations
If your cashflow forecasts are showing that there may be pinch points due to additional borrowing, review them and seek advice to determine whether you might need to adjust your debt obligations.
Cash collection remains key
Having an effective credit control process will be key to making sure that debtors remain at a reasonable level. If your customers are likely to be adversely impacted by Brexit, then knowing that in advance will help you plan your cash position.
The delays to the supply chain and general uncertainty will likely have an impact on most businesses’ cash positions, regardless of whether they import or not. Monitoring your cash position and looking forward will help you to ascertain whether you need additional support, either in managing your cash or in reviewing your working capital requirements.
To discuss your cashflow position, contact Heather Bamforth on 07900 263 235 or email firstname.lastname@example.org