Dorian Crighton - PKF Goldsmith FoxWe outline 10 key strategies to focus on as you manage your Cash flow during the lockdown period. Solid planning and good decision making will determine the sustainability of your business.

1. Take advantage of government support

Utilise wage subsidies and tax breaks to keep your business open and people in jobs. Look for alternative actions – could changing your GST reporting cycle get quicker access to GST refunds?

2. Review and adjust cash flow budgets

In these challenging times, you need to know well in advance what a reduction in revenue will have on your ability to pay suppliers and repay debt. Prepare a weekly cashflow forecast to understand your payments and banking requirements. When the lockdown has ceased, you may require some additional funding to cover payments until your revenue recovers.

Forecast and talk to your bank.

3. Review capital expenditure

Carefully consider any investments in capital equipment until the current situation improves. Noting, the Government has provided an incentive for businesses to invest in capital equipment by increasing the instant asset deduction threshold to $5,000 for the 2021 financial year.

4. Assess financing options

Take this opportunity to actively engage with your bank or financier to ensure your existing lines of credit remain available, and to explore the new options and relief measure currently in place.

5. Timely financial reporting

Ensure that your financials are kept up-to-date so that you monitor profitability, overheads, stock levels, and debtors and creditors balances on a timely basis.

6. Cutting overheads

Review your Profit & Loss line by line and look for savings that can be generated by cutting non-essential overheads. Where labour is a significant cost line in your business, consider ways of reducing staff wages to avoid layoffs.

7. Strategic Inventory management

With many businesses experiencing supply chain disruptions explore alternative supply chains with a view to increasing strategic stock levels as a buffer. Take steps to increase sales of slow moving or perishable stock to generate more cash.

8. Debtors management

Contact your clients and customers. Now is the time to cement relationships. Where customers themselves are experiencing cash flow difficulties, you might consider negotiating periodic payments.

9. Creditors management

Options to manage your debts may be limited, however front foot these call your suppliers and negotiate, they may be in a position to help. Seek payment extensions, cancel orders, or at least delay delivery. Contact your landlord and ask for payment extensions, possible rent reductions or variations to the lease

10. Consider alternative revenue streams

Where your business is experiencing declines in continued revenue streams, consider alternatives. For example, retailers who are experiencing a downturn in passing trade are ramping up their online marketing strategy to attract new customers. What are your opportunities and how can you convert them?

The Team at PKF Goldsmith Fox

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.