Once Wood and Disney have put in placeCash Flow Solutionsto get your business back on track, with money coming in at the right time and at a level to meet the money going out, then we need to move on and look at longer termCash Flow Solutions.We need to build a cash reserve in your business to make your business resilient and to support growth.
The vast majority of small businesses have no cash reserves and continue to trade despite their balance sheets often having more liabilities than assets ie they are technically insolvent. To support our clients in building this essential war chest Wood and Disney have developed the Strategic Cash Retention Programme®.
Why not just use a cash flow forecast?
Traditionally cash flow forecasts are the tool of choice, used by business managers and accountants to predict cash inflows and outflows to a business. But cash flow forecasts are not necessarily helpful during a time of uncertainty. A cash flow forecast may show that a business can afford to borrow more money or that a cash crisis is due to occur but unless you think strategically and start to build reserves then your business will always be hit by the unexpected (or even expected) downturn. That is, a cash flow forecast may warn you about an upcoming cash shortfall in your business, but it is just a tool. It is not a long term cash flow solution. Itdoesn't on its own prevent the cash flow problem occurring.
Wood and Disney's Strategic Cash Retention Programme® is a cash flow solution that usescash biased bench marking based upon our most successful and resilient businesses. In essence we compare your business to this ideal bench marking and advise you how you can improve your cash position and build cash reserves into your business.
We ask the tough questions such as:
- Are you retaining enough cash to support future growth?
- Are you provisioning for all known liabilities even those which may be due more than 12 months away?
- Are you overspending on overheads?
- Are your shareholders taking too much out in dividends?
- And then from a practical basis are you removing from your day to day operating bank account the various provisions for liabilities that will need to be paid or repaid in the short and medium term such as VAT and Tax? Once you have done this you are building genuine Working Capital to help support growth in sales.
Wood and Disney's Strategic Cash Retention Programme® starts with having a strategic plan and setting goals so you stay focused on retaining cash. By understanding where your money is being spent you regain control and can either reduce/eliminate any borrowing or build cash reserves to achieve financial freedom.
Wood and Disney's Strategic Cash Retention Programme® builds on the idea of “Free Cash” as opposed to “Trapped Cash” which will become increasingly important to a business owner when they come to sell their business and want to maximise its value and therefore increase their own personal benefit.
If you are interested in being strategic and building resilience with long term cash flow solutions rather than just juggling cash every day you need to contact us.
Call us on 01206 233 170 to talk about how we can help you build your long term resilience.
