Now that we are officially in a world wide recession what should we be doing? If we listen to those that have just realised we are in recession we might think all we need do is hold on until things get better next year. But if they did not know the recession was coming until things were really bad, how do they know when things are going to get better?
We are also told the recession is world wide but the UK is better placed than other countries – so why is Sterling going down against the Dollar and the Euro?
While we need to listen to what the ‘experts’ are saying we also need to get on and make the best of the situation.
In stormy times cash is king, so close attention must be paid to making sure cash is closely controlled. Instead of the profit & loss being the primary focus, attention needs to be switched to cashflow. Key areas to look at include:
- Accurate forecasting of cashflow on a monthly basis for 12 months and a daily basis for 8 to 10 week is essential. Performance against the daily forecast needs to be continually monitored and adjusted – this means looking at it every day.
- Money from debtors needs to profiled and collections closely controlled – the telephone is the greatest weapon in the fight to get paid.
- Credit terms and limits need to reviewed and applied rigorously. Tight credit control is crucial to the process – if customers do not pay on time or go beyond their credit limit - stop supplying immediately.
FC Procurement then you need to see what they are offering.
Cost control is also important and all costs must be closely scrutinised and suppliers changed where appropriate. If you are not already using the services of companies like
Rapid change and fast moving situations always throw up many opportunities – you need to spot these opportunities and be ready to grasp them. Having access to a pot of cash or access to capital is a great position to be in!
Areas to watch include:
- Sterling weakness is an opportunity to look closely at overseas markets. A poor exchange rate makes UK goods and services cheaper for overseas buyers. There is a lot of help available from
Well good luck going forward; hopefully things will improve sooner rather than later!
Next Level Financial Management is a specialist Chartered Accountancy practice dedicated to turn round & rescue and VAT & PAYE arrears arrangements. Email firstname.lastname@example.org or 0191 548 6000 / 07939 809 249.