Dealing with a cash flow crisis – where should I look for advice?

Maintaining a healthy cash flow is essential to the success of any business, particularly those just starting out or looking to expand. However, it is also an incredibly misunderstood concept that causes problems for a great number of small to medium sized enterprises (SMEs), often leading to the ultimate failure of the business.


Consequently, it’s imperative that any business owner or manager understands exactly what is meant by the term. Cash flow itself is the way in which capital flows into your business, through its inner workings and out of the other side in the form of expenditure. If income is tied up in a company, whether it’s because of the need to pay debts or that sales are being made on credit, a business can become unresponsive and unable to cope with any additional demands made of it, resulting in a cash flow crisis.


What does it all mean?


Having a good understanding of cash flow, and how to react in the event of a cash flow crisis, is of particular importance in the context of today’s economic climate. As smaller businesses suffer from an inability to borrow and consumers look to spend carefully and sparsely, many companies find themselves struggling to maintain a healthy cash flow, with many considering a major restructuring of their processes. This has resulted in a much greater demand for financial help and advice amongst such businesses, a demand that is being met by a number of sources. With this in mind, we take a look at the best options for advice on cash flow in times of need. While some sources are services provided by professional financial advisors, others are not-for-profit organisations or even people with previous business experience.


If you have experience of running an SME in the past, you will no doubt have experience of managing the cash flow of a business and knowledge of what can go wrong. Whether the actions taken in the past in an attempt to rectify cash flow problems were a success or not, they can tell you a lot about what may work with your current company. Learn from the lessons of the past and think carefully about how you can apply them in a contemporary context. However, it’s important to remember that not all businesses are the same and, consequently, solutions will have to be tailored to your precise situation.


Seeking business advice from the right areas


There are a number of advisory organisations that can offer great advice on a wide range of financial matters, including issues with cash flow and corporate recovery. A number of these will do so for free. The National Council for Voluntary Organisations (NCVO), for example, has advice on cash flow crises that include case studies, the use of various forms of multimedia and utilises partnerships with charities to provide further help. The website is a great way of finding more information and gives you access to an incredible number of different sources, most of which small businesses will find helpful in one way or another.


The industry that has sprung up around providing financial advice is large and continues to grow. This means there are a wide range of options when it comes to using a professional advisory service and there should always be a company that can satisfy your needs. It’s important to look for a business that specialises in the area in which you’re struggling. For instance, when facing a cash flow crisis, it will be necessary to look to an insolvency specialist for advice specific to the situation. By doing this, you will ensure that the recommendations you receive come from a reliable and reputable source.


As more and more of our social and business lives take place over the internet, our online business and entrepreneurial communities continue to grow. This means that there is now a rapidly developing and incredibly responsive source of information and advice right at your fingertips. Though the quality of advice and information found on the internet should always be questioned, there is no doubt that it has become an invaluable source of help for many business owners. Looking to other business-minded people that may have experience in dealing with a cash flow crisis could give you an invaluable insight into what options are open to your own business.


Finally, when it comes to a cash flow crisis, it’s vital that you have a good understanding of the company’s accounts and highlight where issues may arise before they actually do. A good accountant should be able to act as an effective forewarning system, giving you an early indication of any cash flow issues. This means that your relationship with those in charge of the books is vital to the success of the business and that they will often be one of the first sources of advice and information you go to when faced with a troublesome financial issue.


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.

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