Cash is King – how to manage potential risks and surprises.
One of the key challenges as a business owner is dealing with surprises.
Chris Langrick says: “We believe that one of the key tools to help manage risks and potential surprises is by maintaining a rolling 13 week cash flow forecast (linked to a profit and loss account and balance sheet), with a financial dashboard, circulated to the key decision makers on a weekly basis. Your dashboard should provide you with a debtors summary (and understanding whether your debtors are increasing or decreasing), highlighting any specific risks or concerns.”
A well-managed business would be able to reflect those risks into their cash flow projection in order to get a good understanding of the financial impact on the business should that risk come to fruition. This could highlight the need for a key decision maker within the business to contact a customer with a significant outstanding debt to help chase payment or trigger a need to arrange further funding.
Chris continues: “One thing banks and funders do not like are last minute surprises, but most funders fully appreciate that things do not always go to plan, having control of a situation will provide them with a lot more comfort.”
Should you need any assistance with cash flow forecasting and creating dashboard or require assistance with arranging funding, please do not hesitate to contact us.