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24 January 2024
5 Common Tax Mistakes
14 February 2024
Cash flow planning should be a living document in any business. If you only turn your attention to your cash flow forecast when problems start to occur, you’re already on the back foot to start managing the unexpected when it happens. The longer these issues continue, the more exposed your business becomes and further unexpected dents to your cash flow can put your business at serious risk.
It’s important that business owners PLAN FOR a crisis instead of just REACTING to it. Although the specifics of the unexpected event can’t necessarily be predicted, the impact on your business can be. Crisis will happen at some point. You need to be prepared for it and equip your business to be able to ‘ride out the storm’ and ultimately survive.
Here’s some thoughts.
- Test your forecasting! Don’t use your cash flow forecast simply for vanity metrics. Graphs and charts always look great when everyone pays on time. What does your forecast look like when only 25% of your clients pay on time? What if this happens for one month, two months… six months? If you haven’t tested those scenarios, do so now!
- Don’t get complacent. Don’t be tempted to eat into cash reserves as soon as any cash flow issues ease up, or you think your business is undefeatable. Remain controlled so that you continue to benefit and create a decent cash buffer for when times may be lean again.
- Don’t file it away. Once you have a detailed cash flow forecast and you’ve tested it, don’t simply file it away! The document should be a living, breathing part of your business. Cash flow planning isn’t just a task to tick off and to revisit on an annual basis. Make it visible.
The coronavirus pandemic was somewhat of an extreme crisis to plan for, but what we saw in 2020 was that businesses had failed to prepare for even the smallest of business interruptions.
Does your business need support?
If you’ve identified that your company would struggle if further cash flow crises hit the business, talk to our expert team on 0808 196 8676 or email help@trusolv.co.uk.
