Managing cash flow during uncertain times

Now may be a good time to question your Business Model
November 5, 2021


Richard Thériault

Over the course of the past few weeks, we have come face to face with a situation that very few people could have seen coming. In a matter of weeks, the economy has come to a halt with even sports teams seeing their seasons postponed or cancelled.

So how are we, small to mid-sized business owners, supposed to be able to manage through all of this chaos? In speaking to clients and friends over the past 3 weeks, the first advise that I provide is to get a firm understanding of their cash flow position. When I work with companies in financial difficulty or going through a restructuring, the first thing we do is sit down and prepare an 8-week cash flow.

The first part of the exercise is to try to figure out everything that is coming in. This includes accounts receivable, loan disbursements, sale of assets, HST refund, government programs, etc. Try to be as specific as possible and estimate which week each payment will be received. Be very honest with yourself on timing as this will guide on when you will have funds to pay your own obligations.

The second part of the exercise is then list out what we need to pay-out. This includes accounts payable, payroll and payroll taxes, HST payments, vehicle loans, business loans, credit card payments, utilities, insurance, etc. Here again, we try to be as thorough as we can.

Once you have your receipts and disbursements entered by week, spot any discrepancies that may arise. Do you have a shortfall? Can we move a receipt or a disbursement to a different week? Can we get an injection of funds from our bank, government, shareholders? This has got to be a living document, adjusted to actual at the end of each week.

The principal goal of this 8-week cash flow is to provide you with clarity on any challenges that may be coming and communicating with your funding partners or suppliers in order to make alternate arrangements. There will be programs offered by government and financials institutions that we have not seen before, so make sure that you are aware and take advantage of everything that you can qualify for. Remember, in situations like this, CASH truly is KING.

Managing cash flow during uncertain times
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