Prepare your finances

An emergency incident in your tourism region or local area will inevitably have a financial impact on  your business. Preparing your business financially so it is ready to respond, recover, and continue operating when a business disruption occurs is as critical as knowing what to do when disaster strikes.  

There are several general business finance processes you can implement to prepare your finances for a crisis event.

Keep your financial records up to date and accessible

Make sure you have up to date and accurate financial records that are protected and easily attainable.

These records, such as receipts, invoices and cash register tapes, can provide valuable information to effectively manage your business through a crisis. By law, it is also mandatory to maintain certain records such as those required by the Australian Taxation Office (ATO).

Consider using EFTPOS or credit card rather than cash for business purchases.  Online bank statements can provide proof of your purchases to insurance assessors and the ATO. 

Back up your financial data

It's important to back up your financial data regularly, either to an external hard drive or to a cloud application.

Using cloud applications to back up data will ensure your financial records are always attainable. The benefit of storing data in a cloud application is if a crisis occurs and your computer is destroyed, your records won't be. As long as you have internet access you will be able to retrieve your information.

In addition, scan rather than file receipts and important documents and store these documents off-site in a secure place, such as a relatives' house or in a safe deposit box with a bank. This may seem an unnecessary step but after a crisis event, simply proving your identity can be incredibly tough if you are left with nothing. 

Regularly prepare financial statements and forecasts

Financial statements and forecasts that are produced regularly and correctly are valuable reference tools to help guide your business planning. They are also key documents for attracting funding. Investors and creditors will use them to assess the health of your business's finances.

There are three major financial statements to understand:

  • Profit and loss statement
  • Cash flow statement
  • Balance sheet

These financial statements should not be viewed as purely assisting you to meet your regulatory requirements, but as a necessary tool for you to manage the performance of your business and plan for the future.

For further information about developing good financial procedures, visit the Business Victoria website External link

Manage and forecast cash flow

Cash flow is the life blood of a business, so managing and forecasting your business’s cash flow is essential for business growth and survival.

It's important to manage your cash flow on a daily, weekly and monthly basis by monitoring the flow of cash in and out of the business. This will assist to identify potential risks and ways that you could improve performance and, in the worst case scenario, survive.

Review this cash flow and create projections based on when money will come in and out – including your statutory obligations. By developing and documenting cash flow projections for several months in advance, you can estimate when the business will be short of money and take appropriate steps beforehand. This cash flow budget is the most useful operational budget for a crisis. It's also the most commonly requested budget when seeking finance from a bank or another financier.

Use the following templates to assist with managing and forecasting cash flow:

Finance in a crisis

For specific advice on how prepare financially for a crisis, visit the Finance in a crisis page

Last Updated 24th July 2017