Cash Management in uncertain times

Apps, Bookkeeping, Cashflow & Forecasts, Corporation Tax, Finance, News, Planning,

There’s no avoiding the fact that we’re going to be navigating difficult waters in the coming months. At times like this careful cash management is vital to enable any business owner to make good decisions at the right time. 

There are already a range of posts across our site which provide additional resources and information around cash management and conservation. Some were written at the time of the pandemic, but given the similarities in the challenge level, still have real value to offer. Our ‘Rebound Resources‘ are a great place to start, or take a look at our Info Centre for more. If there’s something specific that you’d like some help with that you’re struggling to find, please get in touch!

In addition though, we’d strongly recommend the following as action points in the short term for any business owner. Why not choose one or two as a starting point for getting to grips with your cash management, and work through the others over the coming few weeks?

Daily Bookkeeping

This is the only way to be 100% sure where you stand within your business at any point, as far as cash is concerned.

We know the idea of daily bookkeeping is initially daunting, but once you’re into the rhythm it’s really not as painful as it might sound! There are just small amounts to do each day, rather than a huge amount in one go. Implementing Dext, for which we offer clients a free full licence as part of their standard fees, or an alternate, equivalent App, can streamline this process.

Once you have the daily bookkeeping in place you can far more easily have an accurate or at least meaningful cash flow forecast to work with. This will enable you to make informed and timely decision that you’d prove vital to your business success.

If daily bookkeeping isn’t possible because you’re doing your own books and feel you’re just too busy, or your internal bookkeeper has other calls on their time, consider the cost benefit of outsourcing. It really can pay for itself in benefits if you implement the process fully. Ask us if you’d like any help in finding a good bookkeeper, or around what to look for.

As far as cashflows are concerned, you can use an Excel spreadsheet, which is probably the most familiar starting point, but prone to human error and is time consuming. Other options for cash management include packages that link to your bookkeeping software such as Fluidly, Futrli, Float and others, which can help enormously.


Every week (at least) you should review reports on debtors and creditors and get help if you have problems with either. This could be from a legal viewpoint or simply refer the particular concerns to a sounding board with more experience who can give you some guidance.

Ignoring issues on either of these reports certainly won’t help your cash management. Both could be significantly improved with some basic training, confidence building and potentially a bolt on affordable App for your bookkeeping system. Most of these can be implemented swiftly and painlessly.

Check your Credit Control or debtors process is being implemented as you would expect. Be sure that individual debtors are being addressed consistently and frequently without any delay and that any promised payments are followed promptly if they don’t arrive.

Without wanting this post sounding like a plug for lots of Apps, there are some that can transform your Debtor situation without much more than an hour of set-up. We used Debtor Daddy some years ago and it helped reduce our Debtor Days dramatically in a very short period of time. Chaser is a great alternate option, which may be more suitable if you have a greater number of payments to chase, and need to tailor the tone of your communications for different customers.

Chaser also has a wide range of information on their website, so can be a great resource, even if you don’t use the App!

The other side of this coin is of course to make sure that your receipts are arriving as forecast.

Tax Payments

Be sure to take account in your cashflow of forthcoming VAT, Corporation Tax or Personal Tax payments falling due in the coming months. Ideally these funds should be removed from your current account as a percentage of all receipts, daily, weekly or at least monthly.

Is the cash even yours?

Decisions can’t accurately be made just on the cash you have in the bank. At any one moment in time the answer is that it probably isn’t all yours!

Starling Bank, as an example, make it relatively easy to have different savings pots for taxes etc, but it’s possible to replicate the principle by notionally using separate accounts or at least one savings account for future expenses and tax. This is the practical implementation of the Profit First approach.

This removes the temptation of drawing against these funds for current cash requirements.

Some other areas…

Once the basic bookkeeping and processes above are underway, to get the clearest picture of your business, you can add the following, with a call to us if it would help to get them into place:

Fixed Assets

Keep your fixed asset schedule up to date and apply the right amount of depreciation to the items included. Essentially this requires you to remove the right proportion of cash to a savings pot on a regular basis to save for the replacement of assets before they are worn out.

Payroll Journals

Make sure these are added to your bookkeeping system promptly each month, rather than leaving this exercise until the quarter or year end.

‘Accounting Adjustments’

Adjustments such as depreciation can be confusing, which is where we come in! It’s key not to ‘play ostrich’ and ignore these areas if you are unsure or not confident. It’s much better to ask!

Processes like setting up a budget and regular internal reports can feel complicated if it’s not your strength, but they really can be relatively simple to establish and transform the level of understanding you have of your business.

Once in place, these can feed into a cash flow forecast that enables you to track performance and to check the truth of the apparent cash available. This is much better and may be far easier than you may think. It’s certainly an area that we can help with and would be happy to do so.

This section also includes elements such as work in progress, stock and income in advance (including deposits). Capturing these correctly helps towards pricing and margin calculations and ensures that you’re not including cash as available to the business before the work has been done to earn it.

Directors Loan Accounts should be monitored carefully too. Left unattended, this can create a large and potentially unexpected tax issue to contend with.

In tough times you need to have confidence in your supply chain as much as your customers. There’s no point looking for sales if you have no products to hand over, so look at your key suppliers too. How are they likely to cope if we enter a recession? Consider what you would do to replace those suppliers, and what the implications may be for you if lead-times extend or credit terms change, and what the risk is to your business both in the short term and the longer term.


Looking specifically at the finances of your business you may wish to consider the following:

Existing Finance

Review the terms of any current agreements and explore whether it is possible to make those more favourable.

Bounce Back loans can be extended to a 10 year term; if you haven’t already done so this can be an effective way to reduce your outgoings and the demands on your cash.

New Finance

If you’re likely to need new finance options, explore your options well before your bank statements start to show any areas of concern. For example extend or obtain an overdraft if you feel you might need one.

Don’t leave this too late!

Once again, having accurate cash flow forecasts will warn you before you have funding gaps to contend with. Finance IS available in the current climate but it’s not fast to arrange these days so you need to be ahead of the curve in terms of timing.

On a positive note there are lots of different options for finance compared to the historical reliance on bank options. Alternative finance options can be very helpful but will require accurate current figures and cash flow forecasts. If you’d like some suggestions around contacts, please ask.

If you have large bills looming investigate whether it is possible to pay these on a payment plan to protect your cash supply. During the pandemic it obviously became far easier to obtain a payment arrangement for tax amounts that were due, and it may be that an instalment option may be helpful to consider.

Your Terms

Now could be a good time to think about reviewing your payment terms with your customers.

You don’t have to keep to the same payment terms you’ve always offered, nor do you have to offer the same terms to every customer.

New customers and those spending above a certain amount can be an increased risk to your business and therefore justifiably could require a different set of payment terms. This could be a partial payment upfront or staged payments as a project progresses.

If you already request upfront payment of a certain percentage of your price as a deposit there is no reason why you cannot increase this. Again, you must make sure you account for deposits properly though! This comes back to income in advance mentioned above, that cannot be included in your available cash until the work has been completed.

On a related subject, we’d advise that if you do change your terms, you get your written terms and conditions updated by a solicitor and ensure all customers sign them before you give goods, credit or you start work.

There is of course a cost associated with this process but as soon as you’re able to rely on those terms potentially in a court situation they will be well worth the expense.


We’ve talked about the importance of your pricing before but it bears repeating as the most effective way to improve the bottom line of the business. In most cases you can afford to lose a percentage of sales without it negatively affecting the bottom line once you’ve implemented a price increase.

If you’re concerned about the impact of an ‘across the board’ price increase then test an increase on a small part of your customer base or potentially on new customers to gain confidence before taking the step.

Margin calculations and pricing calculations should always be double checked to ensure they take account of administration costs and overhead costs. Again, if your bookkeeping is accurate and kept up to date this is a much easier task.

Many business owners have fallen foul of overspending based on a cash balance, and are then chasing themselves trying to use future sales to pay yesterday’s bills. Ordinarily this situation can be an issue for an under capitalised business in a period of strong growth, but it’s equally as big a risk in challenging times.

In summary…

Many businesses are in a difficult position. They potentially have finance repayments they hadn’t planned on two years ago, lower reserves than they usually run with and are struggling with lengthened or smaller pipelines, rising costs and less surety around incoming payments. Any one of the above would be a challenge all of them in combination could prove fatal.

If any of these apply to you, you’re not alone!

Given the ongoing uncertainty within the economy, it’s incredibly difficult to make predictions, formulate plans or know exactly how to proceed. The best way to protect your business is to make sure that you have a firm grasp on your cash management and your numbers to ensure you are in the strongest position possible.

As the uncertainty around tax decisions and implications hopefully starts to become clearer after the Autumn Statement on the 17th November we’ll be able to provide more guidance as far as taxes are concerned, but the points above give a good starting point for anyone looking to take action now.

Tricky times seem inevitable for the wider economy, but as businesses owners we have a choice around our focus. We can pull back, hunker down and hope, or we can take positive steps to protect ourselves and our businesses and make decisions from a position of clarity, not fear.

As ever if any of the above sound daunting or if you’d like to discuss how they may apply to your own situation, please get in touch; we’re happy to help!

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