Weathering the current economic downturn

A significant contribution to the continued health of your business

The British Bankers’ Association has compiled this list to help businesses to weather the current economic downturn.

• Plan your cashflow requirements carefully and allow for any differences in the payment terms you receive from your suppliers and those you give to your customers.
  
• When you prepare your cashflow forecast, undertake a ‘what-if’ analysis. What happens if sales are 10pc less than the forecast? What happens if raw materials increase in price by 20pc? You can then forecast the worst-case finance requirement which mitigates the need to go back to your bank for more funding.
  
• Review your actual cashflow regularly, at least every month. Check that it is in line with your forecast and act quickly if it is not.
  
• Think carefully about who you do business with and don’t become too dependent on one customer.
  
• Invoice your customers promptly and accurately and follow up to check they have paid. Offer an incentive to pay early.
• If you think you might have a cash flow problem, speak to your bank immediately. They might be able to help and the earlier you speak to them, the more options available there could be.
  
• Be open and realistic with all the facts. That way, you will have a solid base for the banking relationship you will need in the future. Most of all understand your business plan and then monitor progress through it so you can exploit success and limit problems.
  
• Review all of your costs and look for ways to be more efficient. Cut down unnecessary expenditure and strip out as much as you sensibly can.