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COVID-19 Advice for business – Cashflow forecasting - news article image

COVID-19 Advice for business – Cashflow forecasting

27 Mar 2020

3 minute read

Hot on the heels of the uncertainty created by Brexit, the COVID-19 crisis has added a further layer of complexity to an already complex economic situation. Business owners are drowning in information that is being released on more or less an hourly basis from various sources including the Prime Minister and his colleagues, the media, lawyers, accountants and other business advisers. We see it as our role to help business owners filter through the all information that’s out there and to focus on the grants, products and other services that will address specific issues that their businesses are facing in these challenging times.

Understanding the impact of reduced demand caused by the COVID-19 lockdown on your cashflow is critical, and knowing what actions should be taken and when to take them is vital to ensuring that your businesses survive these unprecedented circumstances. Extracting information from financial data to develop cashflow forecasts will help determine where in the coming days, weeks and months cash gaps might arise and how many cash days you have on your balance sheet etc. Understanding the effects of the COVID-19 crisis on your business will allow you to formulate a plan to mitigate the risks of running out of cash so that you can navigate the next few months.

Depending on the size, complexity and nature of your business, building a cashflow forecast does not need to be an expensive exercise carried out on complicated software packages or apps. It is possible to achieve this modesty by extracting information from your financial systems and modelling the data in excel in many instances. Building data around critical numbers such as cash targets (how much cash you need to survive the next two months), cash days (the number of days of cash you have) and the cash gaps you have will help clarify what actions you will need to take. As part of this you will understand the impact of decreases in revenue on profit and cash and what impact the crisis might have on your gross margins etc. Analysing your cost base will also will allow you to take actions around overheads through eliminating or reducing discretionary and other wasteful costs etc.

Once you have an understanding of the cash position of the business, we can support you with identifying the right actions including identifying grants, deferral of tax payments and or the sourcing of funding products and services to close any gaps that are identified. These may take the form of Government grants, CBILs (Coronavirus Business Interruption Loans) or any other form of funding that may be appropriate to your business. We will be able to support you through the process of building projections, budgets and plans and we have the experience to support you through the process of completing business loan applications.

It is important that you understand your cashflow and, where shortfalls are predicted, you need to have a plan to fill the gaps by selecting the most appropriate option from all of those available including taking advantage of the support that is being offered by the Government where possible.

If you would like to discuss any aspect of your business and cashflow forecasting, please do not hesitate to contact me on any of the numbers or the email address below.

COVID-19 Advice for business – Cashflow forecasting - news article image


Peter Watts

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