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Safeguarding your company’s cash flow

15th April 2020

Greg Palfrey, partner, restructuring and recovery services at Smith and Williamson with an office in Guildford, discusses cash flow. 

We are now living in unprecedented times. However, we should not overlook the tried and tested ways of coming through unexpected circumstances. Operationally, people will be looking to safeguard their people and their businesses. This could mean making 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 taking advantage of the breaks and benefits announced by the Chancellor 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 and for a 6 week rolling forward timeframe and thereafter for up to six months to show predicted pinch points when further additional funding may be required. This allows tough decisions to be made, but also means key stakeholders such as lenders can be kept informed and gives businesses the best chance of coming through uncertain times. 

These integrated models that bring together cash flow, trading forecasts and the balance sheet can be a powerful predictive tool. By using these tools management can better predict areas to promote and also where to minimise exposure. Management can look to approach the banks for further funding. Armed with these models and a reasoned short-form business plan, this can significantly improve your chances of receiving a loan and much more quickly. Be prepared. 

By assisting you with modelling working capital requirements and looking at ways of deferring payments to, for example, HMRC under the deferred payment scheme or other creditors, 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 achieving a sound business plan using these decision tools and drawing on our many years of experience. Early action can be important and will give you the broadest range of options. Please contact our restructuring and recovery advisory teams if needed. We are ready and able to help you today. 

Contact 

Greg Palfrey, National Head of Restructuring and Recovery – Partner 

023 8082 7631 

greg.palfrey@smithandwilliamson.com