Leadership considerations for managing cash flow

Published: Monday 19 October 2020

The level and rate of change businesses are currently experiencing is set to develop even further in the coming months. Following announcements of potential further restrictions on a more regional basis, and the possibility of a short circuit break, leaders will need to exercise agility in order to react and adjust their operations successfully. Locations of buyers and suppliers, isolating staff members, and other elements will all have an impact on the decision-making process for leaders. To get the balance right, knowing your cash flow is crucial. 

To continue focusing on a #BusinessForTomorrow, Hazlewoods business experts have addressed the key considerations leaders should account for with their cash flow now.

Latest cash flow considerations

Bringing staff back will be a difficult decision and one which will need much thought. Even with the announcement of the JSS, to follow on from the furlough scheme, there is still the question of whether the business can afford to bring back all or some staff, on a part-time or full-time basis. The short to medium term impact of tax deferrals on cashflow has lessened now that VAT payments can be spread over 11 months; however, the JSS will still require employers to contribute more for staff that will be unproductive with reduced working hours.

Although redundancies may provide an alternative to employers making use of the JSS scheme, businesses will need to be aware that redundancies can be expensive with significant cash outflow, and if demand for goods and services increases in the short to medium term, will replacing those employees be possible? 

Scenario planning

Reviewing forecasts and expected workload over the coming months will determine the level of staff required to help deliver the anticipated work. Hazlewoods business experts maintain that the importance of cash flow forecasting cannot be understated; it enables you to identify potential shortfalls at an early stage and adapt your operations to suit the situation. 

It can help to work through a range of scenarios for your business, for example, with or without redundancies or variations on demand. This gives leaders the facts needed to make timely decisions, whilst bearing in mind the medium to long term outlook. 

Hazlewoods Corporate Finance team produced two basic cash flow projection templates earlier in the year which are still available to download below. For our top tips on how to complete the cash flow templates, read our previous article here or get in touch with one of our advisers.

Click here to download our short-term cash flow forecast template Click here to download our long-term cash flow forecast template

Times like this require leaders to inspire their workforce and lead from the front, and staff will look to those leaders for help and guidance. However, making sure the right decision is made for the business at the right time and handled in the correct manner is difficult and will require careful planning and consideration. 

For more information on cash flow considerations for building a #BusinessForTomorrow or for help with our templates, please contact Scott Lawrence on scott.lawrence@hazlewoods.co.uk or 01242 680000.

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Scott Lawrence
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Ryan Hancock
Ryan Hancock
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