Category Archives: Cashflow

Why bother with a cashflow forecast?

With CBILS, Bounce Back Loans, VAT deferrals, grants etc there may be more cash in the bank now than ever before and your cashflow is sorted for the next couple months.

But what happens after that?

Lockdown has probably helped the bank balance with customers paying while you’ve been running down stocks or furloughing staff. However the problems will come when customers start buying again: you’ll need to buy new stock or pay wages for sales that take a while to be paid for.

Right at the point where your bank balance has run right down you’ll need to invest more in your business.

In addition to this you need to keep an eye on payments due in the future.
Corporation Tax: usually paid October or January
Self Assessment tax: due January
Deferred VAT: due March 2021
Loan repayments: starting May/ June 2021
Plus regular VAT due every quarter regardless of other cash spend

A lot of this cash is heading to HMRC so perhaps a phone call will stem the flow? But that only drains cash from next year’s profits and stifles growth potential.

A plan for the future is vital, which means some sort of cashflow forecast. Even if it’s just a rough estimate, that plan allows you to see what pressure you’ll be under and give you time to take action.

And if you’re going to take action, the sooner the better.

Sometimes getting started is the hardest step to take. If you need some inspiration, or a template to kick off your forecast then get in touch.

Cashflow in a time of Coronavirus

As a follow up on my CBILS advice I want to share the cashflow checklist that I produced for my clients (and for myself!)

A cashflow forecast is the best way to see how much help you need at the moment (and you will be asked for one if you intend to apply for help under CBILS) – surviving 2020 is going to be all about your ability to pay essential bills rather than your profitability.

So I’ve attached the checklist here. Key things that I’d highlight are:

1. Extend your timeline well into your business’ recovery – it’s often restocking/ re-growth that leads to cashflow problems
2. CBILS loans are the last resort: make sure you’ve looked at every option available in order to minimise the borrowing that you’ll need
3. Think about how you’re going to repay any loan (including VAT/ tax deferrals). Repayments will use up vital cashflow when your business starts to recover
4. Stop and think about what the forecast is telling you. Is planning a return to the old normal the right thing for your business? If sales are down to a minimum at the moment then what sales do you want to regain? This is a good time to take stock and re-focus.

It’s always difficult knowing where to start with this, but the checklist has a structure that you can follow and the sooner you get started the sooner you’ll finish. If you get into difficulties give me a call, I’d be happy to help!