During these most challenging of times, I wanted to offer some assistance with what I consider to be your most important task as business owners through this crisis – managing your cash flow. 

 

I appreciate that normally you may delegate this task to someone else or may not review your cash flow position at all other than the occasional review of your bank statements. 

 

For the next few months, I urge you to take personal responsibility for managing your cash flow. Having led two substantial SMEs through two separate recessions I can honestly say that if I had not taken this responsibility then both of those businesses would likely have failed as opposed to emerging stronger. 

1. Do not delegate this task – as the business owner it’s your job to understand and approve every line on your forecast – even if you delegate the preparation to someone else. 

 

2. Create a 13-week cash flow forecast and update it weekly, often daily. Download my template here. 

 

3. Keep it simple – the most effective cash flow forecasts are easy to read and understand and do not take a long time to update. 

 

4. As week 1 ends, change the heading from “forecast” to “actual”, populate week 14 and repeat for 26 weeks. I promise this will get easier every week as you absorb the learning from the previous week. 

 

5. Be pessimistic with your income expectations – if your income proves to be higher than you expect then you may be able to make additional payments in the following weeks. 

 

6. Include any government support (grants or loans) in your income projections – don’t rely on payments being received on the day or even the week they were expected, give yourself some headroom. 

 

7. Negotiate with all significant creditors: can you reduce payments; can you defer payments? 

 

8. If possible, pay your suppliers, if not everything at least something – you will need your supply chain when we come out of this crisis. 

 

9. If you are going to run out of cash, know when this is going to happen – focus on raising the capital you may need now and not at the very last moment. 

 

10. It’s worth repeating – do not delegate this task – as the business owner this is your most important job. 

 

I hope you find this advice helpful. If you need any help creating and managing your cash flow please get in touch and I will be ready to offer my help and support.