In turbulent times, many organizations are under pressure. They are faced with falling sales figures, an increasing debt position and a shrinking cash position. The latter often forms a harsh confrontation with reality: cash is king! Because as soon as your funds gradually dry up, many things in your organization are in danger of coming to a standstill: from suppliers that can no longer be paid to arrears for wages for your employees. But it does not have to come to that if you handle this wisely and professionally.
And you are the queen
Within the organization it is relatively easy to keep a finger on the pulse of the cash position. This involves closely following all incoming and outgoing cash movements on the current account that arise as a result of sales and purchases, VAT transactions, and so on. An important principle here is that what you sell today is often only on the account within 1 to 3 months. If your customer goes bankrupt, the money may never come in again. Conversely, some purchases have to be paid in cash or a deferment of payment is obtained, which puts less pressure on your current cash position. In addition, VAT, for example, is also an important factor in the creation of your cash position. VAT is not a cost or revenue for your organization but invoices are in most cases settled including VAT. As a result, considerable amounts must sometimes be advanced or paid to the tax authorities.
It will of course be even more interesting if you can also make predictions about your future cash position. Based on expected revenues and costs, and the expected payment behavior of customers and conditions imposed by suppliers, you can try to predict in which months a shortage or a surplus will arise in your cash position. In this way you can anticipate this in time and take the necessary steps to collect amounts faster, postpone payments or spread them better over time. In case of a need for additional financing, you will also be able to approach your bank or investors in a more targeted manner with a clearer view of the amount required and the duration of the financing. Be able to consider various options in good time, always yields more than being forced in a certain direction when the water is on your lips. There surely you can use taxfyle.com/sales-tax-calculator for the proper results.
To some, in this period of unpredictability, it may seem contradictory to plan ahead, but for an organization this can make the difference between survival or not. You can compensate for the volatile nature of the market today by building in the necessary flexibility in your greenhouse planning. This is called scenario analysis, where you can start from a standard expected scenario and then also take into account a best and a worst case.
For the Latter
The latter may, for example, concern higher or lower revenues and costs, or better versus worse payment behavior of your customers. A view of your worst case cash position in the coming months can then on the one hand set off the necessary alarm bells in good time and force you to make timely adjustments. On the other hand, it can also bring the necessary peace of mind if it appears that in the most negative scenario a safe cash buffer still remains available and that one will not have to depend too heavily on external financiers.