Now that we're on our way out of the pandemic and Covid funding appears to be coming to an end, here's some up-to-date advice from our Accounting Team on how to keep on top of cash flow and prepare your business for the coming months.
Before COVID and Brexit disrupted the UK economy, we advised business clients to keep between three and six months overhead costs in a cash reserve, in case of emergencies. Businesses that had cash reserves prior to 2020 have made good use of these funds in the past eighteen months as we battled the pandemic and went through multiple lockdowns.
As the economy starts to open up again, and Covid funding comes to an end, many businesses could find themselves unprepared for life after Covid. Whether you have cash reserves already, or you're concerned about the end to Covid funding, here's how you can prepare your business for the coming months.
Cash is king
Profitable businesses can still fail if they run out of cash resources. Keeping an eye on bank balances should be top of your weekly to-do list. The best way to do this is to create a simple spreadsheet that displays your expected incoming and outgoing receipts and payments for at least the next quarter. This way, you can see where the peaks and troughs are going to occur and plan accordingly.
Don’t take your eye off the cashflow ball
Avoid being caught unaware by planning your cash flow in advance. For example, if you are registered for VAT and have agreed to pay by direct debit, payment for the June 2021 quarter will have been taken from your bank account in the second week of August. For traders who have no forward planning of cash flow events, this sudden drop in cash reserves may have come as an unwelcome shock. This is why planning your cash flow is critical.
Rebuild your cash reserves
With Covid funding coming to an end, it's more important than ever to ensure you're prepared for any future emergencies. Rebuilding a cash reserve of three to six months for overheads should be a priority.
We can help
Cash flow management should be a must-do item in the coming months as we gradually unravel from the effects of the pandemic. It should be possible to undertake the necessary planning and review without making a serious dent in your working week. And if business is buoyant, we could manage cash flow planning updates for you.
We understand that no two businesses are identical, so everything that we do is tailored specifically to your needs in order to achieve optimum efficiency and continuing progress toward your goals. If you'd like to make a difference in your business and ensure that you are prepared for the upcoming changes, get in touch with us today.
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