Cash is King!

The purpose of my blog is to keep you informed of things that I have learnt and come across over the years that have helped me both personally and in business. Some of these things you may know and others will be new. The old stuff will, perhaps, help reinforce that you are doing the right thing and the new stuff may help you improve things. There is no right and wrong - just thoughts and ideas.

So, welcome to my first blog and can I say what a strange world we live in at the moment? Remember that we will recover from this time - we are resilient. So please:

• Be connected

• Be well

• Be kind

• Be informed

• Be curious (you have the time)

• Be supportive

Now onto some personal and business things that I think might help you in our current environment.

Cash Is King

At this moment, it has never been truer. What we are experiencing has happened in the past and will happen in the future - think World Wars, Black Plague, Spanish Flu, the Great Depression. The biggest problem is that we don’t know how long this will last and hence what the impact will be.
In these circumstances, I always think of the worst outcome and then if it is better than that, it is a bonus. In other words, try to plan now for a longer period of lock down or reduced activity and work out what you need to do to survive that. Work out what levers you can pull to help your financial position - you don’t need to “pull” those levers but you can have them up your sleeve to be used if required.

Things to consider are:

• Talk to your Bank about principal “holidays” and reduced interest rates

• Talk to your Bank about additional short-term facilities

• Stop all unnecessary expenses

• Review insurance costs - motor vehicles, life and others

• Review subscriptions

• Look to have monthly payments instead of annual payments for items

For businesses you need to look at additional things such as:

• Rental holidays with your landlords

• Collection of debtors

• Revised repayment schedules for creditors

• Discussion with IRD regarding deferrals of taxes

• Discussion with customs department regarding deferral of duties

• Review of all assets to see what cash can be generated from those assets not being used

• Staff - a big area that needs advice from your advisors

The other thing to consider is that you may have to use some of your capital (which you have built up over the years) to help you through his period. That is OK - that is why you built it up so that it could help you later!

In summary:

• Work out what levers you can pull to help you through this

• Develop a plan based on the worst case

• There may also be opportunities that arise out of the situation

• Don’t be afraid to use some of your capital to assist you to protect your future

• Markets go up and markets go down - you have not lost anything until you sell at below your cost price

But most of all, stay safe.

James