Wednesday, 15 April 2020 10:25

Free online tool helps SMEs weather the storm Featured

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Cashflow vs profit what is most important? Cashflow vs profit what is most important?

We’re all acutely aware of the impact the Coronavirus is having on businesses. And right now, many SMEs are in survival mode.

Trying to adapt to the current landscape, keeping staff employed and working out how to access financial support - it’s incredibly challenging for businesses of all kinds. Even with urgent and welcome lifelines being thrown in from the Government, banks and other lenders, businesses are finding it difficult to get the financial support they need.

That’s why we want to help SMEs with some simple steps to managing their finances during these challenging times. This starts with the one thing all businesses can do to put them in a stronger position, no matter what their current circumstances are. That one thing is knowing your numbers by getting on top of your incomings, outgoings and cashflow. It’s not very radical and it’s certainly not sexy but it’s crucial to managing your financial situation.

Our free Online Business Equation Tool helps you gain a clearer picture of the cash coming in and going out of your business, so you can see the difference and budget more effectively. You can add in figures for your expected sales as well as your costs, from rent and insurance to marketing and transport. And you can use it to try out different financial scenarios, such as significantly reduced incomings or the impact of a grant on your bottom line.

 This information can help you to:

  • spot where you need to reduce costs
  • highlight when you might need to chase for payments
  • identify who you need to talk to about payment holidays etc.
  • plan for what financial help you might need
  • take important decisions now, rather than in a panic
  • prepare applications for loans or grants
  • gain clarity on next steps

Alongside the calculator is an automatic cashflow projection which gives an indication of incomings and outgoings spread across the year. It’s illustrative because you’ll pay for things like rent, rates etc. at different times and your income is unlikely to be evenly split month to month – but it shows how you need to look ahead to gain important sight of what’s coming up and where your pinch points might be. Cashflow is the lifeblood of any business and it’s even more crucial to keep a close eye on this as your circumstances change. Take a look at our tips on managing cashflow to help you create a cashflow forecast.

Because the situation is changing all the time and we don’t know how long restrictions on movement will last, we advise using the online calculator for at least two different outlooks. Firstly, input a cautiously optimistic view of what you expect to bring in and pay out, followed by a more pessimistic view. This will give you a best-case and worst-case scenario for the profitability of your business. It will show you how much you may need to borrow and will help inform any conversations you need to have with creditors to put off particular payments.

There is a lot of advice out there and it’s important to keep on top of developments, but the best protection you can offer your business is getting to know your numbers so you’re prepared to take action if and when you need to. You’ll also be in a better position to get business back on track when things start to return to normal.

If you need help with the Business Equation Tool, or need some advice on managing your finances, please reach out to us for help by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. 

Read 1287 times Last modified on Wednesday, 15 April 2020 10:58

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