Managing Cash Flow in Uncertain Times

19th May 2020 |

Maintaining a focus on cash flow makes good business sense, however the devastating effects that Covid-19 have brought, has made cash flow management as important as ever.

Cash flow management or cash flow forecasting is more than just knowing how much money your business has in the bank, what people owe you or who you need to pay.

It is a formal process of determining what income your business is expected to generate over a period of time and when those funds are expected to be received.  It also records what amounts need to be spent over that time frame and also when.

These amounts are represented in equal time frames, usually monthly, and by starting with the money the business currently has in the bank, a business is able to forecast what its cash position will be at the end of each of those months.  It can also show when a business may run out of money.

The cash flow forecast allows a business owner to see how changes they make in the business affects the cash positions and how they can extend the life of the business.

The government stimulus payments, the Cash Flow Boost and the JobKeeper, are both cash flow injections into businesses which are designed to keep them afloat.  Cash flow forecasting will be able to show how these will affect the business finances and what they may run out.

CrossCorp recommends all business monitor their cash flow at least monthly and seek advice as soon as they need it.