Top Tips for Cash flow management
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There's only one way to run your cash flow when you are short of funds and under pressure, you have to visit every
piece of expenditure and question if it is truly required. There are many pitfalls, so here are our top tips to
running your cash flow in a distressed environment, and making sure that your ability to deliver your products
and services doesn’t grind to a halt.
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Tip 1 : Construct a 13 week cash flow forecast.
The process of constructing a cash flow forecast will help you to identify opportunities to
improve your cash flow, and understand the risks.
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Tip 2 : Have a plan.
Figures are only a guide, and there must be a good story and plan behind the figures
that you, your lenders, shareholders, and your creditors can believe.
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Tip 3 : Cash injection to buy time.
It's not easy to do, but it can be achieved if the plan is good, but you may need specialist help.
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Tip 4 : Are you solvent?
If your cash flow problems are severe and things are getting tough, then you should take advice
from an Insolvency Practitioner and possibly an Insolvency Lawyer. We are happy to help guide
you through this process and introduce you to our trusted partners.
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Tip 5 : Maximise your Receivables.
You need to re-visit every Debtor and question every invoice, ask for payments earlier, pull in all your favours,
chase every overdue account and press harder, issue notice of legal proceedings and start the legal process.
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Tip 6 : Minimise your Payments.
This is the hard part, but you must talk to your creditors. If they trust you and believe the plan, they are likely
to support you. Keeping your services running can be achieved, but you ought to get help from an experienced
Turnaround Practitioner who has been there before.
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Tip 7 : Talk to your bank.
You must talk to your bank and keep them informed. The last thing that a bank wants is a surprise as it often
destroys their trust in the Directors.
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If things are very difficult and there is a real risk of insolvency, you should seek professional advice as you can't continue
to accept services from your suppliers and increase their exposure. To do this, could be deemed as 'wrongful trading' and
those creditors could make life very difficult for you should things fail.
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Stephen Moon, Director, Venturn Ltd
Further Reading on our recent articles,
Stephen Moon elected Vice-Chairman of Institute of Directors (IoD) Coventry & Warwickshire
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Read the full article...
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