Cashflow: Where are you at?

Cashflow is king

It is essential that you know the current position of your business finances. Be honest with yourself and make sure you know if or when your business needs help.

Create your cash flow forecast, you may not have had to do this in the past, but you need to make sure you know what cash is coming in and what payments need to be processed, this can be constructed in a simple excel spreadsheet.

Once you have listed all known transactions, you will then need to stress-test the scenarios, for example what will happen if your top customer can no longer pay their account?

Here are some tips that can assist in preparing an accurate cash flow forecast:
  • Call all your current clients/customers and speak about their current situation and find out when the funds will be received. Don’t hold back from entering into a payment plan with them; this will give you a clearer picture of your cash flow.
  • Hold off on larger payments that are not yet due.
  • If you are renting your premises, speak to your landlord to see if there is an arrangement that can be entered into.
  • Assume a reduction in your revenue; you must be realistic. If you know that your business will be impacted over time, adjust your revenue to reflect this in the cashflow.
  • Eliminate discretionary spending. What can wait!!
  • Employee bonuses, if there are bonuses due and the employees are depending on them, you should pay them if possible. If you can hold off on paying them for 60 days, then do so.
  • If there are any tax bills requiring to be paid, speak with the tax office or your Accountant about a payment plan.
  • Be transparent with your employees.

Having a rolling cash flow and updating it at a minimum weekly will help you make sure that you are staying on top of any issues that may come to ahead.

Questions you should ask yourself – be truthful

  • Do I know where my business is at financially?
  • Are we broke already?
  • Have I spoken to my suppliers and customers and do I have a clear understanding of where they currently stand?
  • Have I spoken to the ATO?
  • Do I need help? If so, make sure they are qualified.

The CFO Centre has been assisting SME’s for 21 years. We offer highly experienced Chief Financial Officers on a flexible, part-time basis. As CFO’s we are qualified CPA’s or CA’s with extensive commercial experience across multiple sectors, so we know what to look for and how to respond.


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