What are the best cash flow management practices during market volatility?

The Best Time to Revisit Your Modus Operandi is When the Going GetsTough Renegotiate and extend the terms of payments with your main suppliers, while carefully offering shorter terms of payment to your largest customers. Slightly increase your prices. Invent combo alternatives by repackaging your offering to velocize inventory turnover and increase margins. Never layoff human resources in a downturn or you build on quicksand. Tackle new segnents. Open new markets.

Plan, Plan, Plan! What is your do nothing cash flow? Its likely you will know your fixed costs, bank loan payments, wages etc, build them in. Same with any forecast income. Build a base case. How does that look? Then take a look at what you can control your own costs what can you reduce or change the payment dates of? Then look at your income - what options are there to maxmise - beware half price sales - they can bring in cash, but rarely do they bring in enough to continue operating! Get a model that works and one that allows you to do some what if analysis. Redo this each day when cash is tight, but don't get lost in it, use it to make business decisions.

Any business regardless of stage, sector or future plans should track cash daily. Three daily checks or questions to as - how much cash do we have, who has our cash and how do we get more cash - this focuses the mind and means you are always on top of cash.

Control your expenses and assume that revenue can come-and-go depending on market conditions. In tough macro environments, you always want to "control your destiny". Delaying cuts can cause much more long-term pain.

Up-to-date management information and forecasts are vital here. Where are you, where have you been and where are you going - that's what you need to know to run your business and it's also what funders need to know to support you.

In market volatility, venture capital cash flow management demands a blend of caution and strategy. Start with conservative revenue forecasting, expecting lower income due to market shifts. Tighten up on expenses, focusing on essential costs while deferring or cutting back on non-critical spending. Diversify your income sources to mitigate risks associated with market changes. Be proactive in managing accounts receivable, ensuring timely payments. Maintaining a robust liquidity reserve is crucial to buffer against sudden market movements. Regular financial reviews are key to identifying and addressing issues promptly. Also, maintain open communication with investors and partners, keeping them informed and engaged.

My two rules for running any business reagrdless of stage, size or sector. Rule 1: Focus on Cash; Rule 2: Don't Forget Rule 1.

Avoid the domino effect of organisational collapse by putting strategies in place to avoid ‘Robbing Peter to Pay Paul’. In construction, this means carefully planning cashflow, so that each project has a positive cash flow throughout the duration of the project, whilst also allocating the percentage fixed overheads each project will carry for your business to function. For example, put simply, if you have one project it will carry 100% of the overhead, if you have two projects of the same value, they will need to carry 50% each. In practice the overhead can be calculated on a pro rata basis. The overhead will include required profit, directors salary, taxes and fixed overheads - this will help you determine which projects to take on!

Develop a cash flow forecast. This will help you to identify potential shortfalls and take steps to avoid them. Monitor cash flow on a regular basis. This will help you to track your progress and make adjustments as needed. Manage receivables effectively. This includes collecting payments promptly and following up on delinquent accounts. Control inventory levels. This will help to reduce your carrying costs and free up cash. Negotiate favorable payment terms with suppliers. This can help to improve your cash flow by extending the amount of time you have to pay your bills. Establish a line of credit. This will give you access to cash if you need it. Seek alternative sources of financing. This could include factoring your receivables.