You may have escaped hearing about COVID 19, and the affect on individuals and business – if you were living on Mars. In this blog we look at COVID 19 – Business cash flow.

What is clear cut is that your businesses, are in the eye of a financial shit storm.  It doesn’t take a great leap of imagination to see that travel restrictions, self-isolation, supply chain challenges, financial commitments and employees not being able to work inflicting financial pain on your business.

This financial pain may be minor and fleeting for your business, for others it may be anything but minor.  My own business is not immune from the impact, this article is not about me but outlining a what to do approach, looking and dealing with your COVID19 – Business cash flow.

We are in a rolling news event.  COVID 19 – business financial support is being updated, changed and modified, nationally and globally, as governments, businesses individuals react, and/or support each other.

Covid 19- Business cash flow

Your business will survive if your cash flow supports it.  Once the cash runs out, or access to it dries up then it is the end of the business road, do not pass go.

With that in mind, you need to put together a cash flow forecast.  In essence what’s your business landscape likely to look like over the coming few months.  Once you have an idea, however rough and ready then you will make stronger and more informed decisions.


Many of you will be thinking, who knows with certainty what the future looks like.  One hundred per cent agreement from me.  However, not even taking a financial peek beyond today or the coming week may be understandable, but it’s a ridiculous business practice.

The cash numbers follow your view, based on what you know, what you think you know and what you don’t know about your business.  Build your cash flow forecast as though it was your business weather map.

Your cash future can be seen through the prism of a changing and volatile weather system, a force ten hurricane, heavy downpour, occasional shower, or permanent sunshine.

What you know

Start with what you know, that is your customers and your cost commitments.  Business activity will not completely stop, some customers will still but what you sell, some suppliers will still sell you what you need.

Look at your customer base, what is still pretty certain, offline and online, when will it happen, and how much money will come in.

Costs are easier to identify, and this part of the exercise is likely to be more depressing, but still necessary.


The main types of costs will be

  • Fixed costs
  • Stepped fixed costs
  • Variable costs

 Fixed Costs

Fixed costs stay the same, whatever the level of your business activity.    These costs stay the same if, for example you don’t serve any meals, have no customers, or make no products.

For example, fixed costs would be

  • Wages and salaries
  • Insurance
  • Rent

Stepped Fixed Costs

These stay constant and then increase once a certain level of business activity passes.   For example: your business is growing (it will for some), you may need additional staff.

What you think you know

Look at your customer base, what do you think your current customers will buy from you, does that depend on what is happening to their businesses.  What you don’t know can be made more certain by talking to them, dialogue can’t hurt.

Are there potential customers in the pipeline, are there warm leads that will become active, or potential that evaporates?  What might that look like in terms of money coming in, how much and when.

Customers in the ‘what you think you know’ category, will have costs. More customers = more variable costs for your business, but no impact on your fixed costs.

What you don’t know

There’s a lot we don’t know.  If someone says they know what will happen then walk on by, they are talking rotten cucumbers.

We won’t know how long COVID 19 will last, what the full impact will be on customer buying habits, retention of staff, change in the business landscape, business casualties and after-effects.

Don’t dwell on the stuff you don’t know, use that maybe in shaping your approach to ‘what you think you know, but don’t dwell on what you don’t know.

Covid 19- Business cash flow- Next steps

Gather together, ‘what you know’ and ‘what you think you know’.  You want this measured in cash terms, typically what comes in and out of your bank account.

Ideally you are using something like a spreadsheet to do the number heavy lifting work, save the brain space for the thinking about your business.    An example of what the end game can look like,

April 2020May 2020 June 2020
Receipts (In)2,000600800
Payments (Out)1,8001,4001,200
Difference (In less Out)200(800)(400)
Cash at the start500700(100)
Cash at the end700(100)(500)

Once you know what the next few months looks like you can then make some grown up decisions.  For example, different ways to get more cash in, tighter credit control, delaying payments, eliminating costs, overdrafts, access to other funding.

Be sensible, careful and think through the consequence to your business from your decisions.  If you are going to delay paying suppliers then talk to them, and don’t piss them off; where you are going to cut costs, does this affect your ability to trade in the future. In other words short term pain relief may mean long term anguish.


In times of uncertainty, as well as calm and prosperity you need your Numbers.  “They’re the most frightening part of business, because they’re that best friend that always tells you the truth”, Christoper Lamont, marketer extraordinaire .  If you want your business to carry on, see what your business cash future looks like, and then come up with a plan of action.

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