After the flood: How businesses can take back control of their cash flow after a natural disaster

Whether it’s a storm, a bushfire, or the devastating floods that Brisbane has faced recently, rebuilding your business after a natural disaster can be a daunting and dispiriting task. Amidst the chaos, it can be hard to identify and focus on your priorities – but following these steps will help you avoid a cash flow crisis and get your business on the road to recovery.

Adjust your forecast

Craig Mitchell, a Business Services Partner with BDO in Brisbane, has long been an advocate of the importance of financial forecasting (you can read his tips for building a business budget in four simple steps here). 

But even the best-laid plans often go awry, and when disaster strikes, Craig says it’s important to go back to the drawing board and adjust your forecast. 

“Every forecast is just your best estimate of where you’d like your business to be in the future,” Craig says. “But there will be unforeseen circumstances, things you couldn’t plan for, that you won’t have incorporated into your budget. When we have a natural disaster like we’ve seen in South-East Queensland, coming on the heels of the significant impact of COVID, it’s a good opportunity to look at your financial forecast and update it to account for how these events have affected your business, specifically. 

“Have you lost capacity to make sales to your customers and your clients? Are staff unable to turn up to the premises because it’s flooded? Have you lost stock, or is there stock you can no longer sell that you had forecast to sell over the next period? Faced with problems like these, you need to reforecast your ability to make sales in the short term.” 

Craig recently hosted a webinar on controlling your cash flow for the Brisbane Business Hub, which you can watch below. He says it’s important to understand how cash flows through your business at the best of times – but in a time of crisis, it’s more important than ever to stretch your cash flow further. 

“The priority has to be your cash flow,” Craig says, “and doing everything you can to avoid a cash flow crisis as a result of this event and secure the immediate future of your business.” 

In the aftermath of a natural disaster, here’s where you can turn to increase the cash coming into your business – and reduce the cash going out. 

Government assistance 

“In an emergency like this, every level of government steps up and offers their support,” Craig says. “There is help going around for businesses at the moment, so it’s important to look to your local Councillors and Members of Parliament for updates on what’s available to support you – both as a business, and as a resident who’s been affected personally.” 

Brisbane Business Hub has compiled a rundown of the support that’s on offer for businesses in the wake of the recent floods, including rate relief and the Community Facility Disaster Relief Payment program from Brisbane City Council; the Queensland State Government’s Extraordinary Disaster Assistance Recovery Grants to assist directly impacted small businesses, primary producers and non-profits with the costs of clean-up and recovery; and Australian Government Disaster Relief Payments to support individuals who have been significantly impacted. 

Insurance 

“Take every opportunity to claim what you can on insurance, and make those claims as soon as possible,” Craig says. “Whether it’s business insurance, or from your landlord, or any personal insurance you might be able to claim, get on it as soon as possible, because the sooner you make your claim, the faster it will be processed, and you can get cash flowing into your business to help you get through this short-term time of need.” 

Deal directly with your insurer, or a trusted and authorised insurance broker or financial advisor, to make your claim. If you’ve lost your insurance details, call the Insurance Council of Australia’s disaster hotline on 1800 734 621. 

You can also call the Insurance Law Service on 1300 663 464, or the Natural Disaster Legal Helpline on 1300 527 700, for free legal advice and support. 

Remember – the sooner you lodge your claim, the sooner you can get cash flowing into your business to assist with repairs and maintenance and rebuilding your inventory. 

Banks 

“Your bank manager should be your best friend when you’re running a business,” Craig says. “You should be working closely with them, and keeping them well-informed about what’s going on with your business. This is where your financial forecasting is key – you can refer to your projections for what you expect your business to look like over this recovery period in your conversations with your bank manager about the support you need and what they can do for you.” 

Let your bank or lender know you’ve been impacted by a natural disaster, and ask about their financial hardship options. 

After providing them with an overview of your financial situation, they may be able to assist you with a range of financial hardship options, including changing loan terms; temporarily pausing or reducing payments; deferring repayments and interest payments; waiving fees and charges; and providing finance to help cover cash flow shortages. 

Similarly, you can contact your utility providers to ask about their financial hardship options for electricity, gas, phone and water bills. 

Suppliers and customers 

“Talk to your suppliers, and let them know you might be in a tough situation for the next period,” Craig says. “You might be able to ask for some friendly credit terms to help get you through this time. 

“Even if you haven’t been affected by the floods, you might find that some of your suppliers have been. They might not be able to supply you, or they may need to raise their prices. In that case, you’ll need to take that into consideration in your supply chain management. If that supplier is critical to your business, you may need to support them and help them through  this.

“It may even be a wake-up call about the risks in your supply chain that you need to address, to make sure you have alternative supply chains you can call on to safeguard you against future disasters and disruptions.

“The same can be said for your customers that have been affected, if it reduces their ability to buy your goods and services. Are you too reliant on key customers? You may need to seek out alternative markets that you can sell your products into, to make you more resilient in a time of crisis.” 

Communicate with your customers about when you’ll be open for business and whether or not there are any changes to how you operate that they’ll need to be aware of. Engage with them to find out how the floods have affected their business and their ability to make payments – because that will affect your cash flow, too. 

“In the case of flood-damaged stock or inventory or plant equipment,” Craig says, “you may even be able to pivot and convert them into cash relatively quickly by talking to your suppliers and customers.” 

Financial counsellors 

Still feeling overwhelmed? A financial counsellor can help you make a plan to get your money in order, and can even talk to creditors and negotiate affordable payment plans on your behalf. 

Financial counselling is a free and confidential service offered by not-for-profit organisations. 

“By all means, you should talk to a financial counsellor,” Craig says. “They can help you work through your options and find alternative options, and help you with negotiations that will improve your cash flow. They can also provide you with support and guidance as you put together your cash flow forecasts and your budgets while you’re recovering.”

To talk to a financial counsellor, contact the free National Debt Helpline on 1800 007 007. Free financial counselling for primary producers and small business owners in southern Queensland is also available through the Rural Financial Counselling Service.  

The business community 

“You’re not the only one going through this,” Craig says. “In a time of crisis, you’ll usually find that you’re not alone. Reach out to the business community, and you can find the resources you need to work through the problem together. 

“Maybe the business across the street hasn’t been affected as badly as you, and they can provide you with support. The real beauty of being in business is that sense of community – and you probably won’t realise how much help is available until you ask for it.” 

For more information on the support and resources available to flood-affected Brisbane businesses, including financial support, business grants and assistance, and mental health support, visit Brisbane Business Hub’s Brisbane Flood Business Support and Resources page.

You can also watch Craig’s full webinar on controlling your cash flow here, and register for upcoming workshops and masterclasses here

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