 Hwyl, mae'r anodd wedi'i gweld argyfaelio gwirionedd y dyfodol yn Ffynanz. Felly, dyfodol yn gyflawni gyda'r ysgolwyd yw'r ysgolwyd eich gwirionedd ar y dyfodol, mae'n gwybod, mae'n gweithio gweithio'r ddifrwysig. Ond rydyn ni'n gweithio'n gweithio gyda eu rechydig o ddiddordeb o gydag, sut ydych chi'n cofwyr o'r hy ru, y dy llwyffodig iawn yn meddwl i'ch meddwl i'r gael profi artistiau, a llwch gofynaddodd mwy oherwydd nhw'n meddwl i chi'n meddwl i chi yw'r gwaith. Adwch chi'n meddwl i siaradig llawer o wahanol, ond rydych chi'n meddwl i'r gael profi, ond ei fod yr hoffnig, ddilyn gan y gwybod, ond yn hynny'n meddwl i chi'n meddwl pob gwelwch i'r wont o'r cwrs honno ychydigol. haf yw'r ffwrdd, o web enw. Yn ddylwn i'n ddweud beth sy'n ddim yn fwy ystafell yma, mae'r ddweud ar gyfer bod yn ymgylch, o'n ddweud. Yn oedd yma'n cyffredinol i'r ffordd o gwestafell yn ymddangos ychydig, mae'r ddweud o'r cyffredinol o'r bwysig, mae'r ddweud o'r cyffredinol o'r cyffredinol o'r cyffredinol. Ychydig yw'r cyffredinol o'r cyffredinol o'r cyffredinol. Felly we're going to talk about, well, what is a cash flow forecast? Start with, then that's going to be very brief. We're also going to look at why we cash flow forecast, not just now, but in general as business, why one should be cash flow forecasting on a regular basis. We're going to look at some of the different types of cash flow forecasts that you may have seen or you may see. We're going to then do a bit more of a practical, I will be guiding you through how, well, one method of cash flow forecasting, and it's the method that I use for cash flow forecasting. And then we're going to look at how we'd alter that forecast due to the current situation with COVID-19. So what is a cash flow forecast? A cash flow forecast looks at the balance of all of money flowing into and out of your society or company at regular intervals. The length of that interval, that those regular intervals is very dependent upon your business. And actually it depends on how predictable your cash flows are, how large your cash flows are, your stage in the business cycle and the tightness of your cash flow. So if you have predictable cash flow, the interval can be larger. So you could be looking at doing them every month. If you have a large amount of cash flowing through, then the interval should be shorter. So you'd be looking at every week rather than every month. Your stage in the business cycle or that's whether or not you're in a period of growth or a period of consolidation. And if you're in a period of growth, then your cash flows can be less predictable and is actually one of the most dangerous times for a business in terms of running out of cash. So the interval should be shorter. If you have a tight cash flow as in you're not actually managing to grab that much money, that much cash out of the cash that flows through your business, then the interval again should be shorter. So this is a graph of the classic business growth pattern that business textbooks say should happen, but obviously it's nonsense, but they may happen. But theoretically you have these periods of growth followed by periods of consolidation, followed by periods of growth, followed by periods of consolidation. But in these periods of growth, you are actually at a higher risk of running out of cash. So you should be spending more time looking at your cash flow during these periods. So if you are a co-op with a large cash flow or a bakery or a shop, you want to be looking at doing a weekly cash flow forecast if you're a co-op in a period of rapid expansion or a co-op with possible cash flow issues. So most co-ops right now, you should be looking at doing a weekly cash flow forecast. However, if you're a grant or subscription based organisation or you have predictable cash flows, e.g. your renewable energy generating society, then you can get away with having a monthly cash flow, the interval of your cash flow forecast being monthly. And a cash flow forecast looks at the actual payments of money. So when the cash changes hands, so it's not when you write an invoice, but when the invoice is paid. And traditionally you do it for either the next year, or if you're borrowing money for the length of the loan, or if you're doing it as part of starting a project for the life of that project. That's how long it will be, so it will be monthly or weekly for the next year. So why do we borrow cash flow forecasting? Well, in business you'll hear this said a lot, cash is king. What do you mean by that? Well, first of all, when we use the word cash, we don't just mean the pay cash that you have in your tin or the money in your wallet or the money in your till. We actually just mean money we can get our hands on very easily to pay our bills for obligations. And you need that cash to be able to pay your bills by stock, invest in people and equipment, and put very simply, if you do not have cash, you cannot continue trading. And you need to know whether at all points in the following year you have enough cash to cover your expenses. I, as a co-development worker, see an awful lot of business plans where people show me confidently that in three years' time they will be making however many thousand bank profit a year. And I look at their financial forecasts, I say no if you weren't because you'll have run out of cash before then, and if you don't have cash you won't get to that point in time. So you need to always have enough cash in the bank to cover your ongoing expenses. And normally, you would use a cash flow forecast to plan scenarios. So again, as a co-development worker, one of the times I most often see cash flow forecasts is when people are trying to raise capital, either borrow money from the bank or do a community share offer. And because a cash flow forecast is just a spreadsheet, a mathematical model, if you say everything is rosy as your assumptions and then you put it through a cash flow forecast, then the outputs will all be rosy. And actually that's not much use to you. What's much more useful for you is to say, okay, well, what will happen if, x, y, y, z, in various different scenarios. So what would happen if you had a sudden slump in sales? What would happen if essential equipment breaks? What would happen if you or colleagues fall six, especially for smaller workers' cards? What happens conversely is if your business takes off and you don't actually have the resources to code. So that's why we cash flow forecast primarily is for scenario planning. There are many different ways of doing scenario planning. I'm not going to tell you which is the best risk management tool. Effectively, the only thing that I am going to say is that you shouldn't just pick some scenarios out of the air. You should go through some logical strategic process to choose the scenarios that are likely to happen. One of the methods of doing that is that you do some form of wider trend analysis. So you look at the trends that are going on in the outside world. You then look at the strengths and the weaknesses of your organisation and apply those trends to those strengths that are going on in the outside world to the strengths and weaknesses of your organisation to get opportunities and threats to your organisation. And the threats become the risks in a risk analysis. And those are the things that you should model. So you model the risks identified and you look at the severity of the risk. If the risk is severe, well, how do you mitigate against it and what's your plan being? Here, there are some immediate threats that we should be thinking about. So rather than necessarily doing that whole process that I've just talked about, you can just think of the immediate threats that are happening due to COVID-19. So the possible immediate threats are no sales. The staff being ill or self-isolating. You have supply chain issues. Depending on your business, you might have a sudden or large increase in demand. So quite a lot of businesses, it's not fair to say that all businesses are having the same effect from COVID-19. Some businesses are having to shut up. Some businesses are changing their business model. Some businesses, especially retail shops, food shops, et cetera, are having a huge increase in demand. That they can't actually quite cope with. So these are some of the scenarios that are possible immediate scenarios due to COVID-19. But we also will need to think about the longer term scenarios. So we have some immediate threats right now to do with what's going on in the lockdown. But there are possibly later threats that might be going on once the lockdown is eased. Such as reduced sales, less cash generally for two-and because of the recession. Again, supply chain issues or repayment of any bridging loans that you've received during lockdown. And there is the possibility of interest rate rises because right now we have the lowest interest rates we've ever had. And how long that continues for, who knows. So we might want to have some interest rate rises. So we'll have to see. Just to say all these slides will be sent to you after this workshop along with the spreadsheet that we'll be looking at later. So don't try to write everything down. I'm running through quite quickly. So once you've done a cash flow forecast and you notice that there are holes in your cash flows, generally you need to have a plan to get round this. And there are a number of things that you can do. So you can either increase your sales or increase your margins. Now that's going to be quite difficult right now for some organisations which can't do any sales. You look at reducing your wastage or decreasing your overheads. And these are all things that will increase your profit and therefore potentially increase your cash flow. But things that will specifically look at what's going on in the lockdown. Or the people that are using cash flow. But things that will specifically look at cash flows. You can chase your debtors. Those are the people that owe you money. Or you can delay payments to creditors which are the people that you owe money to. You can put off purchasing new equipment or unnecessary expenditure. You can borrow money. You can get an overdraft which is effectively just another form of borrowing money. You can get equity from your members. So these are all different ways to get cash to put the holes in your cash flow. I am rattling through this a little bit. But that's primarily because we want to have time for the questions and answers. So I might slow down slightly. So now there are some very specific COVID-19 ways of plugging holes in your cash flow. So there are currently government grants available. So if you are in the retail hospitality or leisure sector, there is a retail hospitality and leisure grant fund which is either 10 or 25k depending on the size of your business. If you are a small business and in this it's small business that qualifies for small business rates relief. So, unfortunately, you have to be a rate paying business. So if you write myself and you work at home normally this doesn't apply to you. But there is a £10 grant available that is administered by your local council. You can claim back sick pay on any employees that you have paid who have been isolating because of COVID-19. There are various ways to decrease your overheads. So there is business rates relief for the retail hospitality and leisure sector as well as the early years education sector. You can also decrease your overheads by furlowing your workers and using the coronavirus job retention scheme which will pay 80% of salary of furloughed workers and the scheme went right this morning. So that is actually now up and running. They promised to pay within six days which I am quite surprised about. I have to say, but we'll see. I think it doesn't seem to have actually got overloaded this morning as well which is quite remarkable. There are some other specific things if you're back registered you can defer your back payment. Any back payment that was due between the 20th of March and the 30th of June can be deferred until the first of January next year I think. That's just automatic. They are encouraging you if you have cash flow problems to look at deferring your PAYE taxes or your corporation tax using the time to pay scheme which they have expanded to deal with specifically this issue. Theoretically there are loads available to you through the corona business interruption loan scheme. The take up of that hasn't been very good. So whether or not it's the best way of getting a loan there may be other ways of getting loans right now that might be easier to get. Andy, just before you go to the next slide Colin Buck says that there's a back deferment to March 2021. It's only for back payments that are due between the 20th of the 3rd and the 30th of the 6th. So it's in March rather than in January 2021. Thank you. On a longer term basis it's possibly worth considering using non-sterling based currency or cash for once we're out of the lockdown and we're looking at trying to increase our trading. So there are schemes out there. These schemes tend to be counter cyclical. So when a recession happens there tend to be when there's less sterling around there tend to be stronger but there is the mutual, the open credit network which uses a mutual credit scheme or there may be local alternative currencies available to you and if you start using more of those for your purchases that will save your sterling, your cash for the things that you actually need it for. So what does a cash flow forecast look like? Most cash flow forecasts that you will see will either look like a direct cash flow statement, an indirect cash flow statement or an amended profit and loss forecast. So we're going to look at those three in turn. So a direct cash flow forecast looks like this. I'm hoping you can all see my mouse pointer when it arrives. So we have the months or the weeks or whatever the interval is at the top and then we have kind of three chunks on the left-hand side and that divides our cash flows up into three different sections. So we have what's called operating cash flows or operating activities for operating cash flows and that's the day-to-day normal trading of your business. So the direct method basically lists all of the money that you get from your customers and then it lists all of the payments that you make to your suppliers or your employees and then gives you a net cash flow from your operating activities. Then we look at the investing activities and by investing activities we mean investing with internal investments in the business. So it lists any sales of property plan to equipment or any purchase of property plan to equipment and then has a net for those. Then it looks at financing activities and financing activities are loans, equity, other places where you get money. It lists money coming in from the financing activities and the money going out by the financing activities. So either receiving of the loans or share capital or the repayment of loans. Stroke withdrawal of share capital. Then we have a total net of cash flows. So all of these three different types of cash flows get netted and we have the start, how much money we had at the start and how much money we had at the end. So this is another example of the direct cash flow forecast and again this is just done by the interval being a year, so years. The operating periods are cash receipts, cash out, net cash, money we're spending on equipment, receiving loans, paying back loans, doing community shares, paying interest on community shares, closing cash, the net change, closing cash. So that's the direct cash flow. You will also see the indirect cash flow forecast and actually I use the indirect cash flow forecast a lot and the method that we'll be looking at later uses the indirect cash flow forecast. Again it has the period at the top, I can't put my mouse up there, I apologise, it has the period at the top, lists the operating cash flows, then it has the investment cash flows, the internal purchasing, then it has the financing, anything to do with loans, net changes, open cash balance, closing cash balance. The difference is that the operating cash flow is calculated not by listing the amount of payments that you get from your customers and then the amount of payments that you'll be making to your suppliers because that can be quite tricky to predict. So what it tends to do is, well what it does is it starts with a figure that you know which is the predicted operating profit which you'll get from your profit and loss forecasts and adjusts that figure for any of the things that will be appearing in the profit and loss statements that are not related to cash. So you'll add back in the depreciation because depreciation appears in the profit and loss statement but it isn't a cash expense. It will then also look at any changes in stock because if your stock increases, that won't appear in the profit and loss statement but it will cost you money and changes in debtors and creditors. Once it's made all of those adjustments then you have what is now the net operating cash flow and we're going to look at this in more detail later. The other type of cash flow that you might see is a profit and loss sheet a profit and loss forecast so all of these are just profit and loss but at the end you add in you add in the none the stuff that isn't appear in the P&L such as low repayment. A lot of smaller organisations will do it like this. Okay so now we're going to look at how you cash flow forecast. So there are many ways of cash flow forecasting this is just the method that I use and it's the method that I would recommend but do it your own way. This is here for those of you that have never done a cash flow forecast before how you get around doing it. So first of all when creating a cash flow forecast I usually start by creating a profit and loss forecast. Okay and the way I start creating a profit and loss forecast is that I tend to for an existing organisation I use method one. I tend to generate a profit and loss report for the last financial year or the last year's data that we've got or the last period of the management accounts that you're up to. I predict my sales gross by looking at what my historic sales growth is and following any trend. So what I mean by that is if your historic sales growth has been 10% every year for the last 10 years then you can predict comfortably predict that your sales are going to grow by 10% next year. I predict that I've got a 10% sales growth. If my sales grew by 20% one year then 15% the next year then 12.5% a year after that it's probably better to assume that my sales are going to grow by 10%. So I'm following the trend along and seeing where I think how much my sales are going to grow by. And then I increase my sales and my cost of sales by whatever I predict the sales growth is. It's important to increase them both by the same amount and then I increase my overheads by inflation. There is a formula here for how you calculate sales growth. We're looking at the historic thing so this is the formula that you would use. We're not going to do it right now but it's just there so that you could do that. So this is an example. I have created a spreadsheet which you will all get. So this is a made up made up profit and loss report for a bakery. So it might be slightly simplified because I was making it up so that we have something to show you. So I know that I had said that you should probably do this weekly because I was trying to save time. I've just done it monthly because it's not actually real. So it doesn't matter. So you have the period. It's a profit and loss report. It's historic. It looks at what happens. So you start with your turnover. Then you have your cost of sales. This particular bakery has three different types of sales. It has its own shop that it sells directly from it sells to restaurants and cafes and it does wholesale to other bread shops for supermarkets. You get your gross profit. You have all your overheads. You get your net profit. This is historic and your accounting software will be able to produce a profit and loss report by whatever period you want. I take that and I predict my sales increase sales growth due to using that formula and looking at the trends that have happened. So I say that the shop is going to increase by 7%. The restaurant cafes are going to increase by 10% and the wholesale is going to increase by 6%. I literally just take last April's shop figures which is here and I times it by 107%. 107%. I do the same for restaurants and cafes and the same for wholesale. Very importantly I increase my cost of sales by the same amount so that my shop was increased by 7%. The cost of sales had been increased by 7%. Then I increase my overheads by whatever my predicted inflation figure is. Last year's overheads times inflation. I predicted 2.5% which is what the RPI was in March. Now I have a new predicted profit and loss. This has gone from a profit and loss, historic profit and loss statements to a profit and loss forecast. That's one method. The second method to create a profit and loss forecast is to estimate your sales using your marketing objectives and then using your markup to generate your cost of sales from your estimated sales and then listing all your overheads. Either way, it doesn't really matter. You need to have a profit and loss forecast. Then you need to convert your profit and loss forecast into the operating cash flows. You need to take the profit from your profit and loss forecast and adjust it for non-cash expenses. Adjust it for changes in accounts receivable which is the money that people owe you or accounts payable which is the money you owe the people. Adjust it for changes in stock level. Adjust it for that. We'll talk about how you do those things in a moment. Then add in the other elements to a cash flow. Add in the investing cash flows. Add in the financing cash flows. Some your cash flows. Add in the opening balance and closing balance. We have now taken the 2021 PNL which is the forecast and turned it into a cash flow. What we have done is we have taken the net profit from here. The net profit here minus 57, minus 57, minus 238, minus 238, etc. Made a number of adjustments to it but in a moment come up with a net operating cash flow. Then we've added in any purchases that they are planning on making. The paper is planning on making two lots of purchases, one in September and one in January when it had the funds to be able to do that. It has a load that is pre-paying at 83 pounds a month. Add that in. The net cash flow is opening cash balance. It had 7,500 pounds in the bank at the start of the period. Obviously the net cash flow across the open cash position is the closing cash position. You have now converted the PNL forecast into a cash flow forecast but we need to talk about how you do all of these things up here. The first one is the depreciation. Will you just get any of, if you look at your overheads or your PNL and you go, are any of these none cash related things? Well, depreciation. You know that. We have to include depreciation in our PNL statement but that has no material cash effect. So we add it back in. We add it back in to the net profit. Got to look at the changes in accounts receivable and the changes in accounts payable. You know, and this is where it becomes interesting and you have to basically do this based on your business and each business is going to be different. But because this business has got three different types of businesses, one, its own shop. Two, restaurants and cafes and three, wholesale to other shops. But we know that from our own shop you don't write invoices. Payments are in cash so there's no accounts receivable for our own shop. So we don't have to put any changes for accounts receivable for their own shop in our cash flow. For the restaurants and the cafes and the wholesale we do have to look at the changes in accounts receivable for those two parts of our business. How do we look at those? Well, to calculate changes in both accounts receivable and accounts payable you need to know the average days before your invoices are paid or you pay your bills. So it's the average number of days before your bill, before the invoices that you have written out between the time between you sending them out and when they pay you. This is called the days sales outstanding or if it's around the days bills outstanding. And it's calculated by looking at the volume of your accounts receivable and dividing it by the amount of sales in that day. So you can look at this historically as an average for your days sales outstanding. Once you have an average for your days sales outstanding you can predict what your accounts receivable is going to be. Because if your days sales outstanding is your accounts receivable divided by sales per day then your accounts receivable will be your days sales outstanding times by your sales per day which is also the same as your accounts your days sales outstanding times by your monthly sales divided by the days in the month. So to look at this I'm not going to look at April's because that refers to two years. But if I look at May's what we have done is we have calculated our average days sales outstanding for the restaurants and cafes and for the whole sales we found that the restaurants and cafes are not so good at paying us and it takes an average 35 days for them to pay us. With the whole sale it generally takes 28 days and we are standard we pay our bills after 30 days. What I will look at for the changes in accounts receivable is I will calculate what my accounts receivable was in April and I will subtract from that the accounts receivable in May. So the accounts receivable in April I calculate by the sales in April divided by 30 times by my days sales outstanding. I will subtract from that the accounts receivable for May which is the sales in May divided by 31 because of 31 days in May sales outstanding. It is exactly the same for the accounts receivable whole sale except for a slightly different date. It is the other way around for the accounts payable. In accounts payable what I am calculating is the bills due in May divided by 31 times my days bills outstanding my accounts payable in April which is the bills due in April divided by 30 is the 30 days in April times by the days bills outstanding. Importantly to get the changes in accounts receivable we use last month's accounts receivable minus this month's accounts receivable minus this month's accounts receivable. To get the changes in accounts payable you use this month's accounts payable minus last month's accounts payable. To look at changes in stock you use last month's stock subtracted from this month's stock. This means that if there is more stock this month you have a negative cash which is what you want. Then you make changes for that. There is too many different things going on so it is a lot easier to separate them out. I have a line which shows you the bat that you are going to receive on sales each month. I have another line which is the bat paid on purchases for each month. Then I have another line which calculates either the bat owed to HMRC or the battery claimed from HMRC. That will happen in the month following each of your back quarters, whichever your back quarter is. Obviously if you are not back registered you shouldn't be doing this, this is only for back registered businesses. As you can see because it is a bakery all of its sales are zero rated so we don't have a line for bat received from customers but we do have a line for bat paid and we also have a line for bat that we claimed from HMRC. You are going to have this spreadsheet so you can interrogate it in more detail. Now we have to make some more changes because that would be a standard cash flow forecast that we have got. We might want to alter our cash flow forecast because of the current situation. I would suggest you do at least two forecasts. I would suggest you do at least two forecasts. I suggest you do in the immediate forecast. The immediate forecast is purely focused on the lockdown period and it is purely cash flow forecast and what it looks at is will you run out of cash. If you will run out of cash when or if it doesn't look like you are going to run out of cash immediately how long will the lockdown period how long does it have to continue before you run out of cash which is a useful thing to know. If you are going to run out of cash how much do you need to borrow to survive this period? Andy, can we just check that you have plugged in your computer and it is? Thank you. I have plugged in my computer, yes. Yes, I saw it. That was the bit where I went out of the screen when I went out. Thank you Richard. Apologies everyone. You also do a longer term forecast. The longer term forecast is the one where you can do several because you should be looking at different scenarios here. The longer term forecast is looking at the effects of the likelihood of a session on your business. This should both be a P&L and a cash flow forecast. This should lose the scenarios that we talked about earlier on. Whatever our risk management trends are whatever the scenarios we've come up with on a longer term basis that's what we should be looking at. If you can't predict scenarios because for whatever reason you just don't know how to make any predictions then just look at what happens if your turnover is cut by a quarter or half or three quarters. In the longer term forecast what you should be looking at is will your business still be profitable after this? Can you afford the interest payments on your covered loan? Whatever covered loan you're going to come up with. If your business isn't going to be profitable can you really afford to borrow money now to get through the current cash flow crisis you have? Borrowing money to get to a cash flow crisis is very sensible and is one of the best ways to deal with cash flow. However, borrowing money to deal with an unprofitable business is a disaster because you'll only get yourself into a bigger and bigger cycle of debt. So one of the things that you really need to know is if you're a business which wasn't doing brilliantly has a cash flow crisis because of COVID what's going to happen afterwards? Are you going to be able to afford to pay back the loan? And if not is it more sensible to close now rather than get yourself into debts and then have to close? It's just something to think about. It's horrible to think about but it's a horrible world at the moment. So going back to the short term forecast what we should do is we now need to remove or reduce or increase our turnover similar chain to your customer sales. It is true that there are some businesses that are now selling a lot more than they were pre-lockdown. I can't tell you which one of those three it's going to be. Make any reductions in your overheads due to the fact that your shop is now closed and your light heat and power has gone down. Or any rates relief you may receive is look at any income you'll get from any of the government schemes mentioned earlier. Look at what happens if you delay your back payments. Look at if you need it what happens if you can delay your corporation tax or PLE payments. Then I'd remove any delayable expenditure if you can, just remove any capital investments and you can work out what amount you need to borrow. The amount you need to borrow is whatever the largest negative figure is. It's the easiest way to work out what you need to borrow. Let's look at the bottom line. Work out what the largest negative figure is. That's the minimum amount you need to borrow. I usually use added contingency because you don't want to have zero pounds in the bank. I often use about 10%. To do that, we go back to our spreadsheet. Why is it saying that? You're plugged in, you're charging. You're definitely charging. We have now just copied the 2021 P&L and the 2021 cash flow again so we can look at it. We go, well actually, we know that our shop is now closed. September, if we're lucky. Let's just say we're going to be shipped close to August. We know that the restaurants and cafes probably they're now talking about Christmas. But actually our wholesale has gone up because the supermarket has got a shortage of bread. Our wholesale has gone up by 20%. We've gone up by 20% and our wholesale has gone up by 20%. We increase by 20%. Our cost of sales here has gone down to zero. Corresponding cost of sales. Our cost of sales here has gone down to zero. Just to match, this is just us matching the turnover. Our wholesale cost of sales has gone up by 20% as well. Great. The furloughed workers, apparently we're getting it now. In six days time. We can add that in. We could only furlough half of our staff because some of our staff still needs to continue. We're furloughing and we're only going to get 80%. Wages, only half of our staff, 80%. It's continuing to July, I believe, at the moment. Although somebody out there is probably going to correct me, but I think it's continuing to July. We're going to get a £10,000 grant from the Small Business Grant scheme. When that's going to come in, it's very difficult to say. It depends on your local council. My partner's business has just received it. I'm going to say it happens in May. The reason is that my local council is definitely doing it as an advance payment before the government are coming up with it. We put that in there. We look at our cash position. We can't purchase any equipment. Do you know that? We can't purchase any equipment. Right. We can't put off the back payments because we actually get money back from HMRC, so that's no good. We may well be able to put that back. Let's just say we can. What's our biggest figure? It's there. £18,000. We will need to borrow that times 0.1. We'll need to borrow it here so that we have it for when the money's run out here. 18.370 times 1.1. We need to borrow 20. We're not going to borrow 20 to 07 hours. We're going to borrow 20K. Now we have a cash flow forecast which shows that we have positive bottom line all the way through questions and answer time. Interesting. On that particular spreadsheet we've just had a question from John Knott who's saying if you're delaying CT presumably you need to add it in later not just remove it. Yes, but this is only for a year so we're delaying it until next year so it won't be in this particular spreadsheet but yes we would have to put it back in again. I think you can do the using the whatever it's called the one the government back scheme you won't have to make any immediate loan repayments now but yes you will have to put in loan repayments so they would have to go into the longer term forecast that I talked about doing because this is just a short term forecast for coping with the immediate lockdown period. Sorry, just remind me what CT is corporation tax. Colin Buck says what do you recommend for monitoring solvency where the business is close to being unable to pay debts as they fold you this may need to be a daily analysis to ensure that the business does not fall into illegal trading. So the think about the illegal trading or wrongful trading as it's called is you need to be looking at your your debt to asset ratio and effectively to look at your equity and if your equity is a negative figure if your network is a negative figure then if you continue to trade without having a plan to get out of it then you are in negative equity you are committing wrongful trading so if you're in negative equity and the situation is getting worse that's when you need to cease trading. Come back to us Colin if you need to on that. Just before we run into more questions could I just run a quick poll just to get an idea of all of those attending it's an anonymous poll but I'm going to launch it so if you could just have a look at this everybody that's online it's a question that's asking all of you how financially healthy is your organisation and the options are we're seriously concerned about our ability to trade we're okay for now but have concerns for the future we're concerned in the short term but fairly confident for the future we think we're okay it's business as usual we've seen an increase in demand sales of profits and there's another option as well and if you are happy to share what the other might be then again just let us know in the Q&As so just trying to get an idea from everybody where they're situated and we've just had about 68% of you voting so we'll just add a little bit longer if we can we want to try and get as good a picture as we possibly can and then I'll ask Garrett if you can just take a screenshot of the poll so we get an idea of our audience we also have a survey that is based on these kinds of questions which we'll share with you as well as all the resources following the webinar again just to get more of an idea of how people are doing out there and we are aware a lot of co-operatives want to know how everybody else is doing this well so I think we've got to the point where most of you have voted so just to run through 5% are seriously concerned about their ability to trade 42% are okay for now but have concerns for the future 26% we're concerned in the short term but fairly confident for the future 20% think we're okay it is business as usual 6% we've seen an increase in demand, sales and profits and there's some others at 6% I wonder if there's anything you want to comment on that Andrew not really there's so many there's quite a different position are you at all surprised about the 42% that we're okay for now but have concerns for the future I think that's pretty normal, most people because at the moment you can furlough your staff most businesses had some cash reserves I'm hoping one of the things I generally advise 3-6 months operating costs as cash reserves so we're not yet got to the point where we're eaten that up and the actual the actual effect for most of us I think is going to be the recessionary effects in the long term and we just don't know what they are no idea so we can't so they're not going to have affected us now so right now people are either looking from home or furloughed so their businesses continuing or they're getting money from the government we're unlikely to be the kind of businesses that have huge amounts of debts unlike the rest of the capitalist world it's not in quite a lot of co-operative nature to have lots and lots and lots of debts that is immediately needing to be repaid for businesses that are really struggling right now Over to some more questions Michael Woodhouse, we run a bakery with a single type point in cash flow every month when payroll happens would you still recommend a weekly cash flow forecast or does monthly make more sense? That's got to be weekly because it's that particular week where everything's tight that you need to know if you just did a monthly then you might not notice those type points so that's particularly what you want to be picking out is what happens around the period of when the payroll goes Mark Simmons saying worth stressing the option of community shares as an alternative to debt if you have an existing investor membership Yeah, definitely Great thing about share capital is it's long term, it's patient it doesn't have to be paid back Running a share offer can be quite a lot of work but if you've got existing investor membership just asking them for more money is easier So if you're interested in running a community share offer please get in touch with co-operatives UK and we can put you in touch with the right people for community share offers if you're a community benefit society or a co-op Co-ops can run community share offers too Thank you Cheryl Honey said are we closer to the government applying its new company insolvency rules to co-operatives I'm not sure we know that yet We can come back to you on that one Cheryl We'll talk to our policy officer at co-ops UK We'll keep that one, that answer and get back to you on that as well as all of these question and answers we'll be able to share all of these with you post-webinar with everybody that's attended Andrew Shadrach, re-wages, prefer loads of staff I guess you could pay them only 80% which will be 100% reimbursed by the government You can only do that if it's allowed in your contract The contract with your staff has to allow that to happen You can't just cut your staff's wages if they have a contract We may go over a few more minutes if that's okay with everyone because we know there are questions to answer So sham sir, the co-op and voluntary sector is more resilient than profit only I believe that too, what do you think Andy? If it's a workers co-op you probably can cut everyone's wages by 20% so you get the full because you can have that mature sensible negotiation and everyone's going to go, I'd rather have 80% of something than 100% of nothing That's the beauty of co-operation, isn't it? The agreement from everyone to get things done I just wanted to be really clear, you can't just cut someone's wages Yes, that's clear Cheryl, a concern about the amount of debt being taken on to survive this year so the real problems may happen in 2021 2022 as you said Andy the implications for managing long term debt whilst in a very uncertain market is probably a concern for many Yes, well you should be looking at you should be looking at your gearing ratios Repeat that, sorry Andy, your what ratios? Your gearing ratios specifically your debts to asset ratio and your earnings before interest and tax to interest payable ratio and that's possibly the most important and that basically is a measure of how much of your profit goes on paying interest Obviously you want to keep that down You don't want to be paying that much of your profit on interest The problem is that whilst you can be concerned about the long term and it's one of the reasons why I said you need to look do a long term profit and lost forecast as well as a short term cash by forecast to see whether or not you can afford to pay this debt back If you went out of cash now, it doesn't matter what the long term situation is going to be because if you went out of cash you're not going to get to the long term situation so you need to find that money from somewhere If it comes to it, looking at this and going actually the best thing for us to do right now is not struggle to stay open but to shut down and furlough that's what you have to do Okay, thank you, sorry if you can hear my phone going or somebody's phone going I can't seem to switch it off until it goes away More questions Nathan Brown, one co-op I'm working with has received extension of credit from 30 to 60 or 90 days from suppliers which provides another opportunity We are seeing a lot of that also asking for an ability to pay just 50% maintenance contract on a lift or an alarm, a burglar alarm but just asking those suppliers whether you can split the costs across the year seems to be working as well but yes, interesting ways of making sure that you're going to be able to ride the tide by asking for longer extensions of credit from suppliers What happens if there is a big difference in percentage change for sales as compared to expenses change i.e. sales go up by 10% but expenses go down by 10% Sorry, say that What happens if there is a big difference in percentage change for sales as compared to expenses change where sales go up 10% but expenses go down 10% Well that's really good So that stays the same then doesn't it No, it doesn't stay the same at all, that's just brilliant You get an extra 20% of profit or not quite, but you get a lot of profit So your sales go up by 10% but your expenses and it depends what they mean by expenses I'm assuming they mean overheads because obviously generally if your sales go up by 10% your cost of sales will also go up by 10% but if there is a divergence then you are going to be a more profitable business so that's not a bad thing And that again reflecting that into the cash flow forecast will show the benefits of what that looks like Yeah, so this is why I have a joint P&L and cash flow forecast because this was the changes that I'd make in the P&L so I'd increase whichever one of these sales or all of these sales by that and then I'd decrease my overheads assuming the person meant overheads by 10% and that would then make a difference and then I'd increase my net profit which would come in here And also, Amanda, I noticed that you say there are a few steps to do which is create your P&L statement, then create your P&L forecast and then create your cash flow forecast If there's any one of those that you miss especially in the small organisation maybe a charity, maybe if I'm a treasurer of some charity and I'm not very good at this sort of thing Could I just do one of those like cash flow forecast without all of the rest and go on best idea based on the account? Yeah, you could do a best idea, a best guesses But the reason I've given you these three steps is this is what I do as the easiest way of doing it And if you're trying to follow this method then you couldn't take out any of those because you just wouldn't be able to get from one to the end I find that a lot of people struggle estimating what sales or cash in or cash out is going to happen in what month So this is a method that I use to try and get round that Okay, and a final question Our board are asking for net current assets to be shown below the cash flow forecast on a monthly basis How would we do this? So you need to get that from the balance sheet Yeah, it doesn't come from your cash flow forecast It comes from your balance sheet And your net current assets is your current assets minus your current liabilities So your current assets are anything that you own An asset is something that you own And a current asset is anything that you own that can be converted into cash within the next financial year So usually that's cash in bank and at hand stock and your accounts receivable or your debtors Yeah Lest your current liabilities and liabilities are things that you owe to pay back within the next financial year So that's less your accounts payable but your creditors and any loans that are due within the next financial year But that information has to come from the balance sheet It doesn't come from this Liz, on that as well, if you wanted that just written down we can probably do that on the resource that's going to be provided after this with all of the questions and answers on that We have one more The loan providers for our CBS have both agreed to interest only payments for the next few months as we have given our pub tenants a rent holiday so our income is nil That's worth asking So the loan providers to our CBS have both agreed to interest only payments for the next few months Yep, so capital repayment holidays are quite a thing They are a technical lender, they are very used to it I have spoken a lot with Treados and EBS a college building society and they are pretty standard now just offering capital repayment holidays to anyone who asks for them So that means that you only pay the interest The problem with that is because their method of calculating a capital repayment holiday is that they don't extend the term of the original loan Your monthly payments will go up once you start repaying So at some point depending on how far down the line you are how many years you've got left on your mortgage it might be worth looking at remortgaging what the outstanding amount for another 30 years or 40 years or 25 years depending on what kind of business you are And we have a couple of questions asking whether I presume you mean co-ops UK if we're providing any relief for COVID affected people We're not a provider of loans and funds but we do provide so much more advice that may benefit you so we urge you to go to our website UK.coop and have a look at the COVID-19 section in the website so that you can have an idea of what is provided and what support is out there Co-operatives are I think the most supportive of all organisations including the likes of Andy and his organisations that he has so kindly come to do this for us and to provide this information just so that you're all a bit more aware and have got some idea how to do this for yourselves We also urge you if you do need more information Andy does this as a livelihood and he'll be providing his details at the end you can always get in touch with Andy as well and please do seek his advice in future if you require it We thank everyone who's joined us we know that there may be a few more questions we will get these e-mail to everyone who did participate we have had an interesting conversation I've certainly learned something and there has been a lot of interest in getting these spreadsheets afterwards Andy so we'll make sure that those go out to everybody but thank you to you, thank you for your great timing and also to everyone who's joined us and please when we send you the e-mail with all of the information on it if you give us your feedback on what more things you might need in future that would be really helpful to us on health and safety webinar will be coming up shortly on health and safety in the workplace during the Covid crisis and we have many more but our advisers are coming up with very soon so please keep in touch, let us know any other details that you might need from us and we'll be working through this period together as best we can thank you all, thank you Andy and take care everybody and stay safe