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The Executive Centre invited their community tenants to attend the “Managing Cash-Flow to Manage Business Risks” webinar on the 27^th of July to help businesses prepare for the present and future in case of any eventualities impacting cash-flow, down turning or hindering or ending the business.

Russell Brown OBE, the Managing Partner of LehmanBrown International Accountants, was the guest speaker sharing his insights and years of experience consulting and conducting cash-flow analysis for all kinds of business in and out of China.

Most businesses would agree that “cash is king”, Russell made it clear that it was particularly true for cash-flow management to take precedent over profit management during uncertain and or difficult times. Companies have to be careful not to pay too much attention to revenue to the detriment of watching their cost base; stop watching costs at your peril, as if the revenue slows quickly, you cannot always cut costs quickly. The pandemic has caused businesses to include in their cash-flow forecasts a worst-case scenario, “valley of death”, a slump of cash-flow, which would put the company in dire situations but would eventually alleviate if all cash-flow aspects were managed effectively and a company having a plan.

However, when determining cash flow and creating a cash-flow forecast, most company managers make the mistake of thinking that it is the accountant’s job. It is imperative that all management of a business get behind all of the aspects governing cash flow and future cash flow, from sources and timing of payment of revenue to purchasing negotiations and timings of payment, through financing options. It is often left to the accountant who has to do a full spectrum analysis based on rational and real possibilities from the information fed to them, but with management understanding and buy to the effects, it could potentially affect the business direly, as decision-makers planning and preparation will be based upon inaccurate or often over-optimistic forecasting.

Cash-flow should include assessments of customers’ ability payment risks, reviewing contracts, credit controls, ability to use invoicing to push for payment, and the effects of pricing. While cash-flow out should evaluate timing of payments, clear payment plans and processes and procedures, possible renegotiations with suppliers for discounts and deals, cross-border coordination with overseas HQ or subsidiaries, and consider tendering for new vendors.

Russell, in closing, commented that cash-flow analysis and forecasting should be seen as an opportunity for businesses to review and prepare for any plausible eventuality, and during a pandemic, it is advisable to do a rolling forecast (monthly or even weekly three months out) to make sure the business is on track. Going further when times are hard, the cash-flow forecast can offer a clear guide for what the team should do as a whole, and the KPIs needed to weather the hard times.LehmanBrown was very thankful for all the attendees that joined the webinar and thanks to Steven Bielinski from the Executive Center for organizing such a wonderful webinar.

For those who would like to enquire about how cash-flow management works and how they can use it for their business needs or for those who would like a copy of the presentation, please email enquiries@lehmanbrown.com.