Make the most of those summer opportunities - Chris Lawrie
Review your cash flow
One of the most important steps firms can take when preparing for higher footfall is to forecast efficiently. Building a weekly or monthly cash flow plan is a good place to start. It can help firms identify potential demand and start to determine how they can prepare to meet it.
It is important for these forecasts to be as accurate as possible. If they are overly optimistic, businesses risk tying up too much money in the day-to-day cost of ‘doing business’. And if they are too pessimistic, firms could end up scrambling to capitalise on demand.
Stress test different scenarios
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Hide AdAs part of evaluating cash flow, it can be useful to assess the impact that supplier payments can have. It is also important for firms to ask the ‘what ifs’ and plan for slumps as well as peaks in demand. A useful tip is to start by looking at just one day of cash flow, gauging what would happen if, for example, the business was able to collect the money owed by its customers one day faster, or one day slower.
Testing these scenarios will help highlight the benefits of certain changes on operations, as well as prove useful in anticipating the impact of difficult trading conditions.
Consider finance tools
Using invoice finance or asset-based finance, where invoices can be part funded by the bank ahead of time, can also help businesses in the tourism and hospitality sectors to secure funding against balance sheet assets. This can streamline borrowings and help firms invest in areas of possible growth, ultimately enabling them to make more profit during busier periods.
Don’t forget agencies and industry bodies such as Scottish Enterprise are on hand to advise and support firms too.
Looking ahead
After a turbulent couple of years, firms need to be ready to capitalise on any tourism peaks. To do this they need to ensure their working capital is fighting fit to meet increasing demand.
Businesses must also take time to review their performance over the past 12 months. By reflecting on how they fared, businesses can start to implement simple steps to make sure they are ready to seize the moment at the next available opportunity.
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