Plan Today for Cash Tomorrow.

24 Jan

Managing your cash flow is more important than ever. This applies to all business whether growing at a rapid rate or rebuilding after covid-enforced challenges.

Take a minute to consider:

Do you have a clear view of your upcoming costs?
Have you set aside money to pay taxes or payroll?
Can you afford to tie cash up in new stock?
Are your suppliers tightening their credit terms?
Are your customers paying you on time or at all?
Are you able to take money out of the business?

If these questions keep you awake at night, then you should spend some time reviewing your cash position and consider what could happen in the next few months.

It was important before, but Covid has reinforced how vitally important it is for all businesses to look forward and plan ahead for a range of scenarios, considering both optimistic and pessimistic options.

With economic uncertainty you might think it’s impossible to predict the future – but there are some practical steps you can take to control your future cash flow and the direction of your business:

Set a detailed budget for 2022, with clear metrics to track. Continuously review your performance against it and hold yourself to account. If your deviating from your targets then take action.
Review the profitability of your products and services and consider the future of those that are unprofitable or not a core offering. Can they be made profitable or should they be stopped?
Review your internal processes and look for inefficiencies. Stop activity that adds zero value. Review your expense commitments and challenge supplier pricing and payment terms at contract renewals.
Invest time in building strong customer relationships. If a customer is regularly paying late then you need to address this head on. Have the difficult conversation. When was the last time you increased prices?
Set a clear strategy for the business and plan for the next 3 years. Get your employees buy-in and encourage their ideas to improve revenues, reduce costs and improve cash flow. Keep this document live and re-forecast regularly.
And lastly, a very practical one… set aside cash in a separate bank account for tax and payroll commitments.

Scotch Accounting specialise in helping our clients manage their cash flow.

We do this by preparing cash flow forecasts, budgets and strategic plans – giving you actionable insights on how to improve your cash position and overall financial performance.

We can also support you with internal process reviews, credit control, improving supplier terms, and fundamentally, ensuring your bookkeeping is accurate and up to date.

If you would like to learn more about how we can help you then book your free discovery call here.