Cost of living crisis – good financial management

As the cost of living crisis continues to bite with high energy bills, supply chain problems, and inflation at the highest rate for 30 years, many businesses are currently feeling the strain.

During these difficult times, it is important to ensure the basics of good financial management is taken care of. Detailed and accurate management accounts, robust budgets and rolling forecasting are all vital tools, and our EQ Leisure team discuss how important they are when supporting our leisure clients below.

Management Accounts – Management accounts allow us to sit down with our clients to review and consider their financial position using real-time information. They can help businesses compare costs quarterly or monthly, allowing you to make informed decisions about areas that might have room for improvement cost-wise or identify overheads that can be reduced. It also allows us to analyse the impact of rising costs on profit margins and ascertain how much the business can absorb before having to pass the increase onto customers and consider the impact this will have on customer demand.

Budgets – Rising costs mean that the budget you prepared 6 months ago may no longer be accurate. You need to know your costs, there shouldn’t be any guess work when it comes to preparing your budget. Adhering to a budget ensures you can make informed business decisions regarding new equipment, staffing, overheads and minimise unnecessary expenses.  By having a robust budget in place, we can regularly monitor and compare it with actuals during the management accounts function.

Forecasting – One of the most important things you can do to manage the cost of living crisis is to prepare a cash flow forecast. Cashflow is necessary to ensure your business can meet its financial obligations. Accurate forecasting can allow you to see the pinch points in your cashflow and proactively plan for them, and this is particularly important during the current cost of living crisis. If you don’t have enough cash coming in to cover your rising outgoing costs, your business will quickly be in trouble.

Regular communication – Keeping in regular contact with our leisure clients allows us to gain insights into their business and provide analysis on how the ongoing financial crisis is affecting them. We can then help provide practical solutions to help, such as relevant tax reliefs, grant funding, considering alternative funding sources or revising terms with your suppliers to spread costs.

If you would like more information on how we can support your leisure business, please get in touch with our EQ Leisure team by calling one of our offices or emailing leisure@eqaccountants.co.uk.