A. Colin Mills of the FD Centre answers:

First, get an grip on where you are in fi nancial terms, and then identify where the business is heading. Then you’ll be able to decide what needs to be done, and where you need to go to get any further help. If you don’t, you’re likely to hit a brick wall at some point in the future.

Key action steps are as follows:

1. Ensure monthly management accounts are up to date and accurate. This should include a profit statement, balance sheet, and cashflow report. Compare this to your original budget and understand the differences. There may be other reasons for your cash shortfall, other than just sales. A good analysis will tell you what these are.

2. Update your forecast cashflow on a receipts and payments basis weekly over the next two months, and also monthly for the next year. This will tell you whether your problem is going to go away, or whether you need to take more drastic action. It will also act as the basis for discussing your position with funders who may be able to help.

3. Use the combination of actual information and forecast performance to work out a short and long-term recovery plan.

Three key things to remember:

1. Take action now. The longer you delay taking action, the worse your situation may become, the more you will worry and the less help you might get from banks or others organisations.

2. If you don’t have the finance skillsets within the business to action the above rapidly, bring in the expertise to do this. Banks will get comfort from well-prepared management accounts and fi nancial forecasts, analysis and commentary, if they are professionally prepared. They will be even more comfortable with the business if they can talk numbers with fi nance professionals on your behalf. You will also get the advantage of people who will be able to negotiate advice on the options available to you.

3. Repeat the process on a regular basis. Don’t treat this exercise as a one-off. In a business suffering diffi culties, it’s vital you have a constant picture of where the business is, where it is going and whether the actions you are taking are working, as well as understanding what else might be changing. The business will change!