Cashflow management – key in Q4 2022, monthly check-ins in 2023

Whatever 2023 holds, there’s no doubt that cashflow management will be vitally important for businesses, says Paul O’ Donovan.

“I think it’s going to be a tough first few quarters for most – especially the first one after Christmas. Make sure your business is resourced and that you understand what you need, that you are looking ahead and ready for changes. For example hospitality, already challenged with staffing needs, may have to adjust to the return to the 13.5 VAT rate.”

Keep up with changes through cashflow management

With rising inflation, energy, wage and wholesale costs it’s important to ensure your business is on top of its numbers, say Paul. Businesses need to be proactive in both looking at the longer term and the monthly picture; assuming everything “business as usual” can have big consequences fast.

“One bakery had been running over 25 supply chains profitably for years. But in 2022 – with inflation and with changes in the UK – a check found 2 chains were now losing money. Decisions needed to be made, and fast, to bring them back into profit.”

Businesses should look at their 2023 budget on a monthly basis to stay on top of it, including reviewing and making decisions on lines that are now not profitable. Good financial oversight is needed to ensure businesses have resources available; review how you pay out on your contracts as well as receive your payments, and stay aware of your costs.

“Your yearly and monthly planning must mesh. The main thing is to ensure the financial controller is on top of cash flow on a weekly or monthly basis; they must stay on top of income and keep abreast of unexpected expenditures.”

Take advantage of 2023’s opportunities 

While we often associate cashflow management with leaner times, effective cashflow management is vital for growth, says Paul, who in 2022 helped multiple companies who had run into problems from growing beyond their means. While in theory this growth was great news, outdated business processes meant they were running out of cash, which was creating difficulties for them.

“If you have resources and cash available to you, you can continue to expand your business in the manner of your choice. But if you haven’t, and especially if you’re in a situation where you’re under pressure to expand, that can be very detrimental. Being unable to move forward all of a sudden will result in you moving backwards.”

Funding and supports for growth

With regards to sourcing funding and resources, it is available but the banks are taking time in reviewing applications so people need to be on top of their finance. Paul advises that businesses need to identify funding gaps well in advance and get their applications in a timely manner.

There is plenty of support out there if you know where to look, says Paul. The recent Temporary Business Energy Support Scheme (TBESS) scheme is very welcome. There are SBCI and Enterprise Ireland supports, including the Ukraine Enterprise Crisis Scheme and Key Manager support.

“Make sure your accountant is aware of these and working with you to identify opportunities. With the right oversight in place, 2023 could be your best year yet.”