The spread of COVID-19 has had a dramatic impact on lives, livelihoods and businesses worldwide.
Now more than ever, businesses are banding together to find innovative ways to minimise the impact on their business. Some are even retooling their current operation to assist with the shortfall of products.
As the country slowly goes into lockdown, more and more businesses are either closing their doors due to safety reasons or have closed due to a mandatory shut down. As a result of this and the travel restrictions currently in place, retailers are bracing for testing times.
What is it that you are doing in your business to make sure that you make it to the other side?
Steps that you should be taking to make sure you know where you stand.
Cashflow is king
It is essential that you know the current position of your business finances. Be honest with yourself and make sure you know if or when your business needs help.
The Federal and State governments have introduced several different packages that are available to assist businesses to get through the COVID-19 pandemic. However, there are some qualifying criteria and conditions within the fine print that need to be understood.
Create your cashflow forecast, you may not have had to do this in the past, but you need to make sure you know what cash is coming in and what payments need to be processed, this can be constructed in a simple excel spreadsheet.
Once you have listed all known transactions, you will then need to stress-test the scenarios, for example what will happen if your top customer can no longer pay their account? Here are some tips that can assist in preparing an accurate cashflow forecast:
- Call all your current clients/customers and speak about their current situation and find out when the funds will be received. Don’t hold back from entering into a payment plan with them; this will give you a clearer picture of your cashflow.
- Hold off on larger payments that are not yet due.
- If you are renting your premises, speak to your landlord to see if there is an arrangement that can be entered into.
- Assume a reduction in your revenue; you must be realistic. If you know that your business will be impacted over time, adjust your revenue to reflect this in the cashflow.
- Eliminate discretionary spending. What can wait!!
- Employee bonuses, if there are bonuses due and the employees are depending on them, you should pay them if possible. If you can hold off on paying them for 60 days, then do so.
- If there are any tax bills requiring to be paid, speak with the tax office or your Accountant about a payment plan.
- Be transparent with your employees.
Having a rolling cashflow and updating it at a minimum weekly will help you make sure that you are staying on top of any issues that may come to ahead.
Questions you should ask yourself – be truthful
- Do I know where my business is at financially?
- Are we broke already?
- Have I spoken to my suppliers and customers and do I have a clear understanding of where they currently stand?
- Have I spoken to the ATO?
- Do I need help? If so, make sure they are qualified.
The CFO Centre has been assisting SME’s for 20 years, offering highly experienced Chief Financial Officers on a flexible, part-time basis. As CFO’s we are qualified CPA’s or CA’s with extensive commercial experience across multiple sectors, so we know what to look for and how to respond.
In these unprecedented times we are offering a complimentary, obligation-free 1:1 scenario planning video call to take you through the first steps of navigating your way through these challenging times. Please follow this link to book your call, or call us on 1300 447 740.