Steps you can take to protect your business’ cash flow and tackle financial uncertainty head-on.

As business leaders around the world grapple with how to manage their teams, workflows, and accounts amid the pandemic, many are unsure which steps to take for the best. COVID-19 has put businesses in immensely difficult positions, and managers across all industries are struggling to protect their cash flows. Unfortunately, this uncertainty can have a huge impact on managers, employees, and businesses. That’s why, at a time like this, it’s vital to spend time preparing for potential cash flow issues.

Here, Scott Dylan shares his proven cash flow tips so that you can protect your business during the COVID-19 crisis. Scott Dylan is an acclaimed investor who specialises in private equity and distressed M&A. Scott is also the founder and key partner of Fresh Thinking Group (FTG), an independent capital investment agency that offers capital injections, research and development and business guidance for healthy companies looking to grow, distressed companies in need of support, and start-ups looking to expand quickly.

The Importance of Cash Flow

Cash flow is the lifeblood of business. In fact, in the short term, it’s often more important for small businesses to focus on sustaining solid cash flow than on making a profit. However, maintaining a healthy cash flow can be particularly difficult during this unpredictable time. Many businesses aren’t used to managing cash flow during a crisis and have found that reliable clients are no longer able to pay for services/products on time or at all.

Scott Dylan

To manage your cash flow effectively, you need to forecast your expected costs and income for upcoming months. You’ll also need to consider how you will manage your cash flow if you don’t receive expected payments. Cash flow is never certain and can stop at any time, which is why preparation is vital.

Here are Scott Dylan’s four methods for effectively managing your cash flow and protecting your business.

1)     Create a Cash Flow Forecast

When businesses don’t forecast potential financial difficulties and plot advance solutions, they often find themselves dealing with challenging cash flow situations later. You can avoid these difficulties by creating a cash flow forecast to identify any potential pinch-points where you may need to cut back on costs or implement new strategies.

You can begin forecasting by assessing your business’ current cash flow and conducting a close analysis of your bank statements and invoices. In future, you can use information from these documents to create month-on-month and year-on-year comparisons. Forecasting will allow you to identify seasonal trends and strategise your business systems effectively.

As you develop your forecasting protocols, you’ll:

·       Understand more variants that can impact forecasting.

·       Be able to examine your business from sales, finance, and procurement points of view.

·       Allow yourself and your team the time that you need to overcome anticipated cash flow matters.

When forecasting, it can be helpful to think about sensitivity analysis – you can plot solutions for the future by taking time to consider how your business would be affected by certain scenarios. It’s important to prepare for the worst, just in case. As part of your forecasting strategy, think about what would happen to your business in the following situations.

·        You don’t receive a big payment on an expected date.

·        You don’t receive a large order that you were expecting.

·        A project’s costs escalate to account for additional hours, materials, or staff.

Planning solutions for these situations helps you to identify which issues you should be most cautious of. It’s important to consider as many potential scenarios as possible. Thinking about your answers to these kinds of questions early gives you time to plan solutions in case similar issues arise in future.

2)     Delegate Cash Flow Duties

Delegating cash flow tasks to a dedicated individual can save financial trouble later down the line. This person needs to understand the business’ cash flow so that they can monitor the company’s finances and assess issues as they arise. Delegating a cash flow role to one team member also helps to streamline processes and avoid communication mishaps.

3)     Keep up to Date with Government Support

The financial landscape can evolve even faster than usual during a crisis, so it’s important to stay up to date with economic developments. As businesses start to resume their operations, the government is announcing frequent changes to the funding available for small businesses. Ensure that you consider all available options to identify the best support for your business during this difficult time.

4)     Update Your Bank

Your bank will likely need to know about any major changes to your income and outgoings, and keeping them in the loop avoids any surprises for both of you. Your bank can also be an excellent source of support during a crisis; they should be able to offer guidance and help to relieve pressure on your business. For example, your bank may be able to curb your interest payments and/or offer loans.

Managing Your Cash Flow

While many factors are out of your control when it comes to your business’ cash flow, well-thought-out preparation is the best method of protection. As a leader, you need to know how your business can best navigate uncertainty to maintain longevity. You can adopt these cash flow tips to keep your finances running as smoothly as possible, no matter what.

For more business tips and guidance, visit Scott Dylan’s blog at https://scottdylan.com/blog, where he shares his expertise on successful acquisitions, mental health in the workplace, and collaborative business practice.

About Fresh Thinking Group

If your business is experiencing cash flow problems, Fresh Thinking Group is well-positioned to offer financial support and business guidance. With offices in Manchester, London, and Leeds, Fresh Thinking Group has enabled hundreds of companies to flourish in their markets and achieve impressive returns on investment. Fresh Thinking Group operates throughout Europe in a range of sectors, having acquired businesses in digital, technology, e-commerce, and logistics markets. Fresh Thinking Group also funds various subsidiaries, including Orb Group, Inc & Co Group, and Inc & Co Property Group, each of which holds additional subsidiaries.

Fresh Thinking Group’s founder Scott Dylan is widely recognised for the business transformations that he has coordinated. He guides firms throughout their transformation journeys, enriching each with cutting-edge technology, unrivalled financial knowledge, and high-level software support.


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