In this part of the Business Continuity – What can we learn? series we look at finance.
As one particular business person is famous for saying “Cash is King” and without money coming into the business it cannot function. Your Business Continuity plan needs to consider the various risks to the financial position of your business. This element is often best done with the assistance of your accountant but it is wider than cashflow and being able to service debts.
In relation to finance your business continuity plan should also consider the following scenarios:
● Fraud – what would you do if you sent money to the wrong bank account or a customer sent money to the wrong bank account instead of yours? On quick and easy way to prevent this is to never email your bank details or act on bank details that have been emailed without independently verifying them.
● Banking errors – in the news over the past few years there have been numerous times when banking systems have gone down but what would that mean for your business – would supplier’s put you on stop and would that have a knock on effect? Who would be best placed to make the practical decisions to sort out those immediate problems?
● Extension of payment terms – customers who are struggling may try and eek out the payment terms but this can have an effect on your cash flow. In these current Covid-19 circumstances a number of businesses are seeking to pay later and so you need to factor this in to your business continuity plan.
Reserves – even businesses should try and save for a rainy day.
Availability of credit – it’s difficult to try and maintain a relationship with your bank manager – often they either do not exist or are changing every few months due to restructures. Making sure you keep your businesses financial plans and records in order on a monthly basis can make it much easier to pull together the financial information you might need to apply for a loan or increase in credit facilities.
