Cash Flow – Running at a loss: what to do next
Most people starting up a business need to allow for a period when they have more money going out than coming in. If you have a loan, it’s a good idea to keep an eye on your business plan to see whether you’ve allowed for a period of running at a loss and have a realistic amount of capital to keep you going through that period.
If your plans weren’t realistic enough or you’ve been hit by an unexpected downturn, you may have to consider raising further finance. Your bank manager will be looking at your cash flow forecast for three to six months ahead, to run reality checks on the kind of costs you face. Plot this out before the loan interview.
Check, check, check
|√||Check your financial records and make sure they are accurate and set up so that it is easy to keep track of income and expenses|
|√||Are your bank accounts set up so that your business bank account is only used solely for the business and there’s no bleed through to personal expenses?|
|√||Do you have a separate account to put aside taxes and levies?|
|√||Check your invoicing. Are you on top of your debtors, invoicing work on completion and chasing up late payers?|
|√||What does your budget look like? Have you set one and are you on track with it?|
|√||Take a look at your expenses. Are there any you can trim? Is it possible to approach your creditors and set up time payment arrangements?|
Professional business advisors – who can help?
Lastly, are you trying to do all of this yourself? We understand that when cash flow is hard, calling on a professional advisor might seem like a luxury you can’t afford right now. However, sometimes you can’t afford not to. If anything described above rings alarm bells but you just don’t know how to fix it, please let us know. We are a team of helpful, experienced Warkworth accountants and we can help you put together a plan of action.
Call us on (09) 425 7719. We’re local like you!