With the Covid-19 crisis affecting businesses everywhere, you need to stress-test your P&L to determine what your business can handle to survive. This consists of running a series of mission critical what-if scenarios to help plan your cash flow future.
Now that you have evaluated your expenses and did the first level of reviewing your future income, you can now bring both of these concepts together to effectively build and run a set of scenarios to see if the impact on your future cash flow.
Expenses what-Ifs
On the expenses side, you can see the impact of varying options that you can do to your expenses such as renegotiation your company's cell phone plan or internet monthly plan. You can also see what happens if you delay your payments, performed any payroll cuts or simply put some expenses on hold (or cut them completely). CashFlowTool makes it simple for your to see this direct impact on your cash flow. Simply go into the Cash Flow Details and update the transactions below the chart as needed to immediately see your cash flow position.
Income what-ifs
You can also model any changes to your income (cash in) include discounts that you have given your customers, late payments you have negotiated, lost business or simply a general sales decline. Using the same process above in expenses what-ifs, use CashFlowTool to immediately see the impact on your future cash flow for the next 30/60/90 days. Ultimately you need to get a model that is hopefully break-even or recover to cash flow position soon.
Blog: Evaluate-your-expenses-now
Blog: How to review your future income
Blog: Calculate & Forecast your cash burn rate
Blog: Perform cash break-even analysis
Our Covid-19 "Help my Business" Resource Center
Have questions? Email the CashFlowTool team
Author
Dave Fester
Dave is the Chief Marketing Officer at Finagraph where he is responsible for the company's marketing strategy. He ran a marketing consulting business for 9 years and prior to that, was an executive at Microsoft for 20 years.