31/08/2023

31/08/2023

Surviving A Cashflow Crisis

Have you considered ways you can best prepare your business for the trying times ahead? First point of call should be assessing your cashflows. Will you be able to cover payroll expenses if cashflow diminishes? The best time to take action is now to save your business from a cashflow crisis. 

Review your business plan

Often we tend to think a business plan is a once of production that once developed is set in stone. On the contrary, a business is plan is something we must continuously refer back to and adjust to reflect the economy, environment and industry our business is a part of. Review your business plan to see what areas are least and most profitable and which seem to be the most costly. Of course, this doesn’t mean it is possible to shut these parts down but it will draw attention o change in demand of each department and you can look for alternatives to cut on costs and remove unnecessary expenses.

Collect your receivables

The quicker you receive money owed to you the quicker your cash flow problems can be resolved. Request deposits form new customers, bill customers at the start of a job rather than on completion. Use split invoices, bill for part orders received and jobs as they go along instead of all at once. Make it as easy as possible for a customer to pay you, the more difficult or time consuming it is the more likely they will be to ush it off till later.

Deal with your payables

Just how receiving money owed to you as soon as possible is gospel, as is prolonging paying out the money you owe. In business you want your receivable days to be low and our payable days to be high. This means you want receivables to pay within around 30 days of being invoiced and you want to pay your payables up to 60 days after being billed. Negotiate different payment options with suppliers. Just like you they too will be assessing the financial future of their business and would much rather come to an agreement of payment rather than face the uncertainty of whether they will even be paid.

Know your borrowing options

Long term debt offers lower interest and more affordable repayment options, but sometimes they are not always necessary. Sometimes a business credit card or short term bank loan will suffice but this is dependant on your companies current financial position and how you expect your business to ride the wave of the coming year, which you will now have a better understanding of since reviewing your business plan.

Reduce expenses

It goes without saying, business or personal, when cashflow is uncertain expenses must be reduced. Money being spent must be scrutinised and only the expenses that keep you operating and generating turnover must be prioritised.

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That being said, Cooney Carey would be happy to advise you and offer services to ensure your business gets the best possible chance to survive. Reach out to our team of experts for more information at info@cooneycarey.ie.