Keeping an Eye on Cash Flow

Projecting your cashflow pipeline forwards during a crisis is vital.

To be able to navigate the future path of your cashflow, you need to start forecasting.  You start by mapping your projected cash inflows and outflows over the coming months, just to make sure you have enough to pay everyone…including yourself!

Plus, when you have access to detailed forecasts you can

  • Play with different scenarios (what happens if we have to lockdown, what happens if you take a week holiday), 
  • search for cost-savings, and 
  • look for strategies that will keep your cash flowing.

Forecasting your future cash pipeline

Remaining in control of the cash coming into (and going out of) the business is the real focus, so you can accurately predict your financial position and can resolve any issues.

Key ways to get more from your forecasting

  • Update your cashflow regularly – The financial landscape changes quickly at the moment. The more up to date your cashflow is, the better chance you have to react swiftly to any projected cash issues as soon they become apparent.
  • Explore different revenue streams – most sectors will have seen their face-to-face sales drop due to restrictions. Consider different ways to create income. For example, some coffee shops now sell roasted beans online. Some gyms produce video content or virtual boot camps for their customers. The idea is to find ways to increase the money that’s coming in the door and balance out your unavoidable expenses.
  • Get proactive with cost-cutting – if you can reduce cash outflows to a minimum, that will have a real impact on the health of your future cashflow. Pare back your operations and aim to reduce things like unnecessary software subscriptions, or over-ordering of basic supplies. Negotiating cheaper rates with suppliers, if possible, will also help.
  • Review your staffing needs – This is a hard one, but look at ways to reduce the costs of staffing and resourcing. Reducing working hours or redeploying staff in different roles are all options that reduce payroll costs, while also looking after your staff’s welfare.
  • Run a variety of scenarios – changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan when restrictions ease. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.
  • Look at various ways to access funding – if forecasts show a giant cashflow hole coming up, you’re going to need additional funding to get through. Consider funding opportunities from grants, banks, loan providers, alternative lenders and crowd-sourcing funders.  And start the process early – you don’t want to be scrambling to try and get funds when the coffers are already dry.

Get in touch to improve your control over cashflow.

This post was originally written by BOMA and has been updated to make it more personal.

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