7 astute steps to successful cash flow management by an expert!

Cash is King! Having an accurate measure of your company’s cash is always critical, now more than ever. Here at Astute, as part of a new series of articles, we are sharing 7 simple steps to guide you, in collaboration with a fully qualified accountant and expert in providing cash flow advice and more to SME businesses and larger organisations.

David Thorley is an experienced, fully qualified Finance Director with a proven career in managing the financial tillers of several businesses. Together, we wanted to share his 7 steps to achieve successful cash flow management.

Over to David….

“We need a 13-week cash flow!

An all too familiar phrase that I have heard over the years from banks and finance providers and in these uncertain times an especially challenging request even for experienced number crunchers!

You can, however, meet this challenge using the following simple tips: –

1.    Communication with your finance provider is crucial – whatever the reason, DO NOT make promises you know you cannot keep and DEFINITELY DO NOT say it can’t be done!

2.    Very few businesses can accurately predict cash flows, but everyone can make an informed forecast.

3.    The past may not be an accurate predictor of the future, but it can be an indicator! Summarise the cash flows over the previous 6 – 12 months over key headings and use for forecasting future            trends.

4.    All forecasting relies heavily on assumptions that identify the key sensitivities (e.g. you could be predicting quarterly rent payments being agreed to be deferred or moved to monthly).

5.    Look for seasonal fluctuations in income or expenses – right now this could be forecasting recovery of previous levels of sales over a 3 to 6-month period.

6.    It’s not unusual for the balancing number (to keep within the facility), to be payments to creditors and, in times of extreme cash pressure, this is inevitable; but again, communication is vital              to avoid going on stop with crucial suppliers.

7.    You may need to prepare more than one forecast – based on different assumptions. Again communicate the basis of the chosen forecast when it is shared.

The most important point is to always try to anticipate potential issues. Banks particularly appreciate early warnings especially if it is a potential breach of facility as it indicates a degree of control.”

Great tips so thank you David!

If you need a cash flow expert in your team, call Astute and we would be delighted to assist you.

We will be issuing more articles and tips on a wide range of accountancy, finance, HR and recruitment issues in collaboration with experts in these fields.

If you have found this article informative and helpful, please let Mary Maguire at Astute Recruitment know as feedback is always welcome. Feel free to share this article with others who you feel could find this useful.

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