To say the Covid-19 pandemic has been an uncertain time for the economy would be an understatement. But, ensuring that your business is operating with an efficient cash flow and forecasting will help aid your business through these unprecedented times. Here at Kara Accountants, we’re here to give our advice on how best to navigate your business through this pandemic ensuring that you are financially prepared through any uncertainty.
The financial impact of Covid-19 in the UK
One thing that is certain, the economic and financial impact of Covid-19 pandemic in the UK is an ever-changing situation. As a consequence of travel restrictions and social distancing measures, the UK was officially in a recession following two consecutive quarters of negative growth in 2020 Q1 and Q2. Although the economy made a small recovery in the following months, as the situation and pandemic is constantly changing businesses have to make sure they are prepared for any further financial impact.
Government support for businesses throughout the pandemic is also changing; we recommend visiting GOV.UK to find the latest financial support available by clicking here. You can also follow our blog where we will be announcing any major changes to the UK government’s support schemes for businesses throughout the country.
Financial forecasting during Covid-19
It’s fair to say that this year has completely changed your financial plan, not just in the last 12 months but even for the next couple of years. We’ve put together some tips to help guide your financial forecast and planning during this time:
- Reduce the reporting interval: Uncertain short-term cash flows mean that you should consider shorter-term forecasting, reducing your reporting interval to weekly or even daily. Traditionally, banks have used this method to monitor businesses with uncertain short-term cash flows which may align with how your business is performing during this time.
- Introducing a rolling monthly forecast: Due to the changing economy and market conditions, a rolling forecast on a monthly basis will be crucial in providing frequent updates to your business on it’s financial performance. Revisiting the forecast regularly will be key in identifying any problems that require action.
- Develop a range of scenarios within your industry: Although the current pandemic’s situation is extremely hard to predict, having some sort of plan of how this may affect the industry in which you operate could save you work in the long run. Create a strategy to include a best case and worst case scenario to prepare for any changes within your industry; as the pandemic has affected different industries in different ways, this will be relative to where your business is.
- Focus on cash flow: Moving away from traditional profit and loss models and focusing more on cash flow and working capital will turn your attention to the amount of cash coming into your business which is crucial in times of economic instability.
How can Kara Accountants help?
If you’re looking for forecasting and budgeting services for your business, especially during this time of economic uncertainty, take a look here to discover the services that we offer. Our team of A.C.M.A. C.G.M.A. and M.A.A.T qualified accountants are ready to work with you and your business to ensure financial stability during the Covid-19 pandemic.