As part of my ‘Coming out of COVID’ series to help business owners feel more prepared post pandemic, this week’s focus is on cashflow.


Why Cashflow Forecasting is King

For many businesses that have been forced to cease trading and remain shut over these last few months, cashflow is one major headache and worry. We know that many businesses will not be able to open in the same way as they did before. With social distancing measures restricting the number of customers that can be served at one time across a number of businesses, cashflow will be affected.

Knowing what your cashflow looks like each month is an empowering position to be in as a business owner. At Insight Finance Solutions cashflow forecasting is one of our greatest super powers and one that we know our clients get so much value from. At Insight we use Float Cashflow Forecasting software which is incredible. We can plan for different possible scenarios and Float will give us the cashflow forecast. We can plot so many possible scenarios into Float giving us an instant overview of the effect of changes on business cashflow.


A Case Study Example of Cashflow Forecasting

Let’s use an example of a hospitality business like a restaurant.

Under new guidance, it is predicted that restaurants will have to reopen with tables 2m apart. This means a reduction in the number of covers (customers) that can dine ay any one time.

We can use Float to plot these different customer numbers against many variables including:

  • current food costs
  • predicted increased food costs from suppliers
  • running costs
  • staff wages
  • decrease/increase opening hours
  • increase spend per (if the business were to increase prices on dishes)
  • cost of PPE/new technology/screening needed to open as per the predicted guidelines
  • awarded grants
  • furloughed wages
  • furloughed wage change updates (with new guidance suggesting employers ‘top up’ the scheme)
  • potential reimbursement from business insurance
  • selling of assets
  • possible negotiation of reduction in rates

Seeing how these different scenarios can be changed and altered depending on the variable factors will allow this hospitality business to clearly see how many customers they need and how much they need to be spending in order to at least break even. This information is extremely powerful and can guide many business decisions moving forwards. With Float cashflow forecasting we like the fact it is extremely visual rather than just numbers on a spreadsheet. Working with clients to create different scenarios can give a much clearer picture of the direction a business will need to move in.

The same principles of cash flow forecasting can and should be used in every business. Knowing how different factors can be moved and shifted to make better business decisions is extremely empowering. It will help ease the worry and overwhelm that many business owners are facing in these uncertain times.


Predicting Business Life Post Pandemic

As the government guidance changes regularly along with the offered support and the all-important prevalence of COVID-19 in our communities, nothing is set in stone for the future. Having the ability to continue to plan and use cashflow forecasting with every new piece of legislation will help you feel more prepared when your business will be allowed to reopen.

In our next instalment of the Coming Out of COVID series, we will be talking about your reopening strategy so keep an eye out for that.


The Insight Finance Solutions Healthcheck Bonus

At Insight Finance Solutions we offer a healthcheck at an extremely low cost for any business owner looking to get stress free with business finances. During this time of COVID-19, as a bonus to all the businesses we have pledge to help, we are also offering our cashflow forecasting as a bonus to every client on a healthcheck package. This is the first time we have done this but we offer this at no additional cost because we know it is the cashflow forecasting that will give you peace of mind and also pave the way to make those important business decisions over the next few months.

Our healthcheck package is offered at the low cost of £150 and there is no obligation to sign into a contract with us. You can choose to use us as a one-off service at this time, to help you expertly navigate through the changing government advice, or you can instruct us on a monthly recurring basis to work with you proactively as your virtual finance manager.

For more information about our healthcheck package and ongoing accountancy advisory services please click here.