Keeping your cashflow strong
Andrew Hague, Partner
By Andrew Hague, Partner
At the moment cashflow is a hot topic given various Covid loan repayments may be commencing soon. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.
How can you cope with the rising demands on cashflow?
Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for. If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your suppliers to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.
What can you do to minimise cash flow stresses?
Invoice early - Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.
Chase payment - Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.
Talk to suppliers - A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.
Review stock levels - Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?
Review your costs - It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a good idea to make time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can reduce or decide on an alternative approach to.
Talk to the bank - If cashflow is tight, make sure you have conversations early so you have everything in place to see you through.
Discuss things with our tax team – we may be able to mitigate any upcoming tax liabilities by planning for example using the opportunities provided by R&D tax credits or the new Super deduction allowance.
Our advisory team can help you implement plans to protect your business for the long term and help you alleviate cashflow worries.