Cash is king

  • Written By: Con Casey
  • Published: Fri, 20 Mar 2020 14:00 GMT

Safeguarding your company’s cashflow in tough times

Irish Budget 201972

We are now living through an unprecedented event. However, we should not overlook the tried and tested ways of coming through unexpected circumstances. In the first instance businesses owners will look to safeguard their staff and their business. This could mean having to make tough decisions, but those decisions need to be based on a sound rationale and reasoned approach.

“Cash is King” and businesses should be looking to preserve cash and generate it from wherever possible to keep their businesses going in the short-term. This could mean realising value from their balance sheets, obtaining loans from Government funding schemes or availing of the breaks and benefits announced by the Government in recent days.

Much of this sound decision-making centres around good cash flow forecasting. In tough times this should be based on modelling on:

  • A daily receipts and payments basis for at least a six week forward looking window
  • Thereafter for up to six months to identify predicted pinch points when further additional funding may be required.

This minimum forecasting will enable timely decisions to be made, and means that key stakeholders such as funders and banks can be kept informed on a timely basis of funding requirements. This type of approach provides businesses with a fighting chance of coming through uncertain times.

An integrated approach that brings together cash flow forecasting, trade forecasting and balance sheet management can combine to be a powerful predictive tool. By using this approach management can better predict areas to promote and where to minimise and mitigate exposures. With qualitative information management can then look to approach banks for further financing, with an air of confidence. Armed with such information and a reasoned short-form business plan, this can significantly improve the chances of receiving appropriate financing in a more-timely manner. Bí ullamh.

By supporting you with modelling working capital requirements and advising on the judicious management of creditors, loan obligations or by focusing on the most productive parts of the business and reducing costs in other parts, we are here to help you through the coming months.

Our teams are here to offer advice, support and help in developing a sound business plan where businesses can draw on our many years of experience. Early action is important and will give you the broadest range of options.

Please contact your lead partner or Con Casey in our advisory team. We are ready and able to help you today.

We have taken great care to ensure the accuracy of this publication. However, the publication is written in general terms and you are strongly recommended to seek specific advice before taking any action on the information it contains.
Smith & Williamson Freaney Limited Authorised to carry on investment business by the Institute of Chartered Accountants in Ireland. A member of Nexia International.

Ref: 43820lw


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