We’re heading into the final few months of the year and, once again, business owners are being squeezed from several directions at the same time.
Costs are rising. Energy and fuel prices are up. Consumer confidence has taken a knock. And there’s yet another Budget looming at the end of October.
Meanwhile, the Bank of England has kept interest rates at 3.75% for now, but with inflation expected to rise further, another increase hasn’t been ruled out.
Lovely. Just what we all needed.
But here’s the bit we really want business owners to pay attention to.
You can be incredibly busy and still end up with very little money in the bank.
Sales might look perfectly healthy. Your team might be flat out. Customers might still be buying.
But if the cost of delivering those sales has increased and you haven’t adjusted your prices, margins start getting squeezed.
Then cash starts getting tighter.
Supplier payments get pushed back a little. The VAT bill suddenly looks enormous. Corporation Tax is sitting on the horizon. Maybe you dip into the money you’d mentally put aside for tax because “we’ll replace it next month”.
And that’s how cash flow problems often start.
Not with one enormous disaster, but with lots of little pressures quietly stacking up.
So, what should you be doing?
Don’t panic. But do look at your numbers.
Take your current forecast and ask yourself:
→ What happens if costs increase another 5%?
→ What happens if sales drop by 10%?
→ Are your current prices still giving you the margin you think they are?
→ Have you allowed properly for VAT, PAYE and Corporation Tax?
→ How much cash do you actually have available once those liabilities are taken into account?
And please don’t wait until there’s £73 in the bank and a £15,000 VAT bill due on Friday before deciding we should probably have a chat 😂
The earlier you spot a potential cash flow problem, the more options you usually have.
You might need to increase prices, reduce unnecessary spending, change payment terms, chase debtors harder, delay investment or arrange funding.
None of those necessarily means your business is in trouble.
It means you’re running the business using the numbers rather than waiting for the bank balance to tell you something’s gone wrong.
If your forecast for the next few months is making you slightly uncomfortable, talk to us now.
We’d much rather help you fix a potential problem while it’s still small.