With the Covid-19 outbreak impacting the global economy and the ability of businesses to carry out their usual operations, maintaining control on your cash flow becomes crucial to the survival of your business. Below are some tips to help stay on top of your company’s cash flow and improve your positive cash flow:
- Prepare a cash flow forecast
We recommend you prepare a 3 month cash flow. Trying to forecast longer than 3 months may be too difficult. This will help you make informed financial decisions so you can hopefully avoid cash flow shortages.
- Improving your cash inflow
Improving positive cash flow by increasing your income or decreasing your expenses will help the chances of avoiding cash flow shortages. Increasing income during the COVID19 pandemic will be challenging but if you have old stock which can be discounted, that might be a good way to help boost cash flow in the short-term. Some other measures might be to offer a discount on some of your debtors, to encourage them to pay quickly.
- Reducing unnecessary expenditure (cash outflow)
The next best way to improve cash flow, would be carefully review your business cost base to see if you reduce any expenses, especially non-essential expenses. If you critically analyze your cost base, you might be able to save more money than you first thought.
Maybe you can reduce your workforce or cut back the working hours of your employees. You should also apply for the jobkeeper assistance from the Australian government.
- Put your business into hibernation
Some businesses have been forced into hibernation during the COVID19 pandemic. If you are unable to operate during the COVID19 pandemic then putting your business into hibernation might be best to preserve your business.
We understand that everyone is going through a tough time and are committed to helping businesses overcome challenges concerning cash flow and insolvency. We are registered company liquidators who offer a FREE 24/7 insolvency hotline for Australian directors seeking free, confidential advice. Please call us on 1800 731 155 now.