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Home / Accounting  / Managing your cash-flow during the Covid-19 Pandemic

Managing your cash-flow during the Covid-19 Pandemic

We are heading into unprecedented territory and for many businesses managing your cash-flow is going to be critical. For many business owners and senior managers in Irish companies the lifeblood of the business is their cash-flow and protecting this and managing their cash will be critical in protecting the company and its stakeholders to survive this crisis. Remember with a careful, proactive approach we can protect and manage our businesses during these difficult times.

We have prepared a short guide to assist businesses with tips on how best to approach managing your businesses cash-flow over the coming days / weeks and months.

1. Cash-flow Plan

Start with your current cash/bank position, project forward taking account the business’s cash inflows and cash outflows for the coming weeks and month. Click here to download our cashflow template for you to use.

2. Overdrafts etc.

Don’t assume that the financing options you previously had will continue to be available. Engage with your financing partners to ensure your available lines of credit remain open to you.

3. Variable costs.

Revisit your variable costs to see what cost reductions you can put in place that will have an immediate effect. Review and reduce all non-business essential expenditure.

4. Government supports.

In the wake of the Corona virus, government has announced details of support packages for Irish Businesses. These include financial and revenue support measures. We will be doing a follow up on this in the coming days as this evolves.

5. Capital Investments.

Revisit capital investments with a focus on what is really necessary for the near term and will deliver immediate competitive advantage and improvements in the cash position of the business. Example of this would be equipment replacement to reduce costly month to month repair costs or sales and leaseback options.

6. Manage Receivables.

Cash-flow and collecting outstanding payments from your customers may not have been a priority concern in recent times as the economy was performing well, but now this should be a primary focus to get these outstanding monies collected ASAP.

7. Extending Payables.

By extending the time you take to pay your suppliers will improve your cash-flow position. This needs to be balanced with maintaining supplier relationships. It may be a good idea, to talk to your suppliers and discuss credit extensions and other payment options. Saving one of the most important points for last, you need to make sure that the accountant you’re considering has the appropriate qualifications. Here in Ireland, there are four main institutions for accountancy qualifications.

8. Credit moratorium with current lending institutions.

By putting a moratorium in place for the next few months, this will give you a window to assist trading through the coming difficult trading environment.

9. Managing Stock.

Check your reordering process as tying cash up in stock unnecessarily may have a very negative effect on your short term cash and reinvestment in stock should only be done on the basis of how long it will take to convert this back into cash from customers.

10. Credit terms for your Customers.

Careful consideration should be given when giving credit to any customers who’s credit history you have concerns about. The same careful scrutiny should be given to any new customer orders. Credit checks would be advisable on all customers as a matter of doing business now, particularly in these uncertain times.

11. Revenue Liabilities.

Again, early discussion with revenue once liabilities have been established. Revenue are open to putting informal arrangements in place to assist viable businesses through this coming difficult period.

12. Think outside the Box.

Now is the time to look at your own business and explore innovative ways to maintain your business through the coming months and engage with your staff and other stakeholders to work together.

If you are worried about any aspect of your business’s cash-flow and feel you need assistance or support from your finance team. Feel free to give the team at Solve a call and we will be happy to assist. Ph. 01-5445375

The Solve team are prepared for remote working so we will continue to provide our full services to your business at this challenging time.