Managing cash flow may present some challenges over the next few months. We share some of our tips and tools for how to handle your cash flow amidst the global crisis of COVID-19.
Across the world, the impact of COVID-19 on trade businesses has been unprecedented. In terms of the volume of jobs, quotes issued and invoices sent, there was a big drop in April as the lockdown took hold, but a bounce back after Easter. Many businesses operating in the UK are likely to have already experienced a decrease in income or may well experience this in the coming months.
The Cash Flow Problem
Tracking your cash flow and learning how to forecast are crucial in order for trades businesses to operate. But even in the best of times - with multiple stakeholders along the chain of work - this can present a challenge. It’s imperative to have a good understanding of the money coming in and out of your business.
Having a clear overview of your cash flow is vital and can help paint the paint of how your accounts are fairing over time. So, how do you do this?
How to Use Okappy to Forecast Your Cash Flow
The number one thing to get to grips with is forecasting. This starts with understanding what the current cash flow situation is and how you expect it to change over time. We know that this may not be looking its best at the moment, but understanding what’s going on will help you put a plan in place to improve it.
There are a few things you can do using Okappy to help you with this.
On Okappy, you have various invoice report options that will help you put your cash flow forecast together, such as for:
- Invoices raised
- Invoices paid
- Invoices outstanding
These reports can be combined into a Google sheet to create a cash flow forecast.
Use the reports to estimate the impacts of increased costs, decreased income and to help you make decisions. Since no one knows what the future will bring, you can use your cash flow forecast to help you factor in for any number of different scenarios that may present themselves e.g. what happens if income is reduced by x for x amount of time?
Additionally on Okappy, you can also see from the jobs dashboard which jobs are completed, but not invoiced for. This allows you to raise invoices more quickly and easily, ensuring your forecast has all the correct data.
Creating Your Action Plan
Once you’ve built up a clearer picture of the cash coming in and out, and what it may look like in the future, you can start to plan accordingly. There are some proactive steps you can take to positively impact your cash flow over the next few months. Here are some things to consider:
Cutting your costs
You may be limited in what you can do to increase your income in the short term, but there are likely to be ways you can reduce your outgoings. What is the state of your variable expenses? What about your overhead costs? It’s worth reviewing these in detail to identify what could be reduced, even if temporarily. Suppliers might even be prepared to give you a discount if they can, so it’s worth checking.
Increasing your rates
Do you have any scope to increase your current rates? You can consider adding a premium to emergency services if you haven’t got one in place already. Make sure you are setting your pricing sensitively and appropriately.
Issuing all invoices
Have all invoices for work completed been sent out? Make sure they’re sent out as soon as possible to bring in cash quicker. The faster you send an invoice, the better the chances are of it getting paid. Consider who you’re doing work for, if a customer has big outstanding balance then maybe cut back on the work you do for them rather than risk not getting paid
With Okappy you can:
- Raise your invoices as soon as the job is complete and, with one-click, send them out
- Allow customers to see the invoice as soon as it’s raised
- Take payments though the platform so you get your cash faster
- Run reports of the invoices received and invoices raised over time
- Use the outstanding invoices report to see who owes who what
- See how much is owed when adding jobs for a customer, so you know whether it’s safe to continue doing more work.
Getting financial assistance
If the situation of your cashflow finds you with more money going out than coming in, you may need to receive some assistance from the government. Information and resources regarding financial support for businesses can be found on the UK Government website here.
What to do In The Meantime
You may not be in a position to dramatically improve your cash flow right now, but there are other ways you can prepare your business for when things pick up again.
Keep connected with customers
Make sure you keep communicating with your customers to check in and update them with where you’re at. Even if it’s to say that you’ve furloughed all your engineers, but will let them know when you’re ready to serve again. This will help keep them in the loop and build trust.
Make improvements to your business
You may find yourself with more time to focus on some of the areas of your business that you don’t normally have time to address. How could it be looking in better shape? Perhaps now is the time to look into other areas of digital marketing, such as social media, that could be benefiting you. You could also use this time to ask for customer reviews - something we all know is important but often gets forgotten.
We hope you find this article useful and it gives you a starting point in helping you understand and manage your cash flow during this time. Don’t forget, Okappy is designed to streamline your communications and workforce management processes, and is one solution that could help reduce disruption to your business. To learn more, request a call here.
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