Cash Management Solutions, a 13 week Plan

cash management for business

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Navigating the unprecedented 2020-2021 economic landscape

Since the virus arrived early last year, every business has faced challenges with the economy on a roller-coaster. We’ve all discovered hidden strengths and have needed a better, tighter and adaptable management system and direction.

The Delta variant put Sydney and Melbourne back in lockdown recently, and once again, we are in the middle of an economic dip. In the current rocky environment, this can signal the end for many struggling companies.


When is it time to look at what you have and change your plan?

Business owners begin to worry when trading debts and tax debts replace positive cash flow. Cash is the lifeblood of a company and critical for you and the health of your business. Fending off statutory demands and directors’ penalty notices can suck the life out of any effective management. Yet, this is the worst time to feel discouraged and let anything slide. Your cash position needs to be clear in your mind and you need to manage what is in front of you.

It is natural to first think about protecting personal assets. In fact, family businesses should always make sure they are in a secure place with properly delimited personal liability. 

Recognising the importance of cash management within your business is the first step to finding the right solutions to implement. With knowledge comes the possibility of planning, which is the very heart of resilience, and the only way to unlock financial flexibility and stability.


The 13 Week Cashflow

Depending on your current state of liquidity, your plan forward will take a different shape. The best way to see your path is through a 13 week forecast that highlights how much cash you have and how much you expect to receive. It is essential for you to be conservative with the cash to be received and the timing it will come in. Include all of your expenses like tax and your own wage.

cash flow statement
For cash handling solutions adapted to your specific situation, you need a clear vision on a number of elements. Cost effective and immediate actions are necessary to turnaround from a downwards path.

What you need to know:
● How much do you absolutely have to spend?
● Where and how can you minimise cash spending?
● Are there some payments to prioritise over others?
● How can you raise cash from other sources?
● Can you negotiate a temporary hold or decrease in rent or bank payments?
● Could you arrange for an early cash receipt from a debtor at a discount or negotiate an early settlement to a creditor at a discount?
● Can you sell an under-utilised asset or refinance debt or raise working capital finance?
● What Government grants are on offer right now with the recent lockdowns?

Once you have answers to those questions, you will have an objective view of your financial situation. It will be much easier to determine what path you should go on and take control of your finances and your business once again.


What is the next step to achieve the best cash management solution?

With uncertainty on the immediate business horizon, knowing your cash position and options to flex out will provide comfort and confidence. It will, without a doubt, strengthen your position. Corporate cash management and liquidity predictions are complex in the best of times, and we are certainly not living in a stable period.

Debt stress and in particular tax debt stress is a pain point for many family business owners, but this is not a necessary burden. Adequate protection of your personal assets and your family should be a focal point once you know your situation.

It is important to realise there are likely to be many root causes to ongoing cash flow issues you might have. Those causes need to be identified for an effective turnaround strategy. Employing a professional to audit your organisational operations is the most worthwhile investment you can make. It ensures you do not get into the same pitfalls again and fluidifies your business, making sure you do not face cash-flow issues whatever the state of the economy.

Get help today

Start with an obligation-free chat about where your business sits right now. We can help with our unique business advisory operational and financial service. 

In one hour, you can have a much clearer view of your business’ possibilities and how we can plan a turnaround.

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If you want my team at Climb Business to help you stabilise and take back control of your business, just book a call.

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