Local accountancy firm Bevan Buckland LLP has reiterated the importance of having good cash flow to businesses throughout the region.
The advice comes as companies of all sizes and niches face an uncertain economic climate due to Brexit.
Examples of the changing economic landscape continue to make regional and national news. Challenges linked to the consumer shift online affecting retail and the high street, and huge changes in motor manufacturing have also been reported as the reasons behind a number of high-profile business closures.
Over the last few years, the media has highlighted stories relating to well-known brands such as BHS, HMV, Debenhams and most recently Arcadia, which includes Dorothy Perkins and Topshop. In the car industry, Honda and most recently Ford have announced closures, whilst in construction Swansea-based Dawnus went into administration earlier this year.
Whilst the above examples of closure, job losses or restructuring are not necessarily linked to cashflow, it is important to remember that cash is the lifeblood of any business and those in the supply chain will need to manage it well during these uncertain times.
“Cash flow is critical and without it your business will not survive. It may be great having good inflows of cash from sales revenues, but businesses also need to control their outflows and focus on their net cash flow. There are fortunately many ways to reduce a cash flow crisis, and our team actively recommends techniques that aid cash flow and ultimately make business growth stronger,”
said Sara Dennis, Director at Bevan Buckland LLP.
Setting cash flow targets, sending invoices promptly, giving your clients more ways to pay courtesy of the latest accounting software, and making invoices and their payment terms as clear, concise and accurate as possible are just some of the recommendations made by Sara and the wider Bevan Buckland LLP team. Businesses should also chase debts and catch credit problems early to ensure cash that doesn’t arrive is pursued.
Businesses should also aim to keep stock to a minimum, consolidate debts into a lower rate loan package to minimise interest repayments, and retain a buffer in the business account to cover unexpected costs. You don’t have to face cash flow problems alone either; as well as getting advice from an accountant, keeping the bank informed is another must. Banks have several facilities, including overdraft and credit facilities, that could be accessible to struggling businesses with prior warning.
“Given all of the uncertainties of Brexit and the changing customer demand affecting businesses across Wales, it is a good time to refresh and update your business cash flow. You should look at any market forces that may influence it during the next 12 months, and my suggestions may also assist. At Bevan Buckland LLP, we are always happy to help with budgets and cash flow forecasts to help your business grow,”