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.