Cashflow in hospitality business


The great COVID cashflow challenge for hospitality

Article by

Pitcher Partners
Pitcher Partners

Newcastle and Hunter

“How’s business?” That predictable yet useful conversation-starter has probably never felt like such a complex question —  and there’s a good chance your train of thought went straight to the word that’s keeping plenty of business owners awake at night.


Way back in March when COVID first hit us with a vengeance, there were all sorts of predictions about hospitality businesses being especially vulnerable and hard-hit in the short term. It’s hardly surprising that 8 months down the track, despite venues being allowed to trade under restricted conditions, managing and forecasting cashflow has become the real Pandora’s box of the pandemic.

And just like the virus, there is no easy treatment.

Whatever you do, don’t take your finance for granted

Business owners are finding it extremely difficult to forecast their cashflows, for obvious reasons. This clearly has the potential to rattle lenders — again, for obvious reasons.

Pitcher Partners Newcastle and Hunter are leading business advisers to around 300 hospitality businesses around New South Wales. Many are based in the Hunter region with others in the Sydney metro and smaller regional areas. We know that plenty of once-secure finance relationships are being tested by uncertain cashflow forecasts and this can make it extremely hard to breathe easy about your business.

Viable financing is critical for your business and peace of mind

Thus far, we’re finding that lenders are willing to listen, provided they have the right information. As well as your cashflow forecasts, your lender will likely demand the assurance of up-to-date, realistic outlooks for the sector and as industry leaders, Pitcher Partners Newcastle and Hunter is well placed to convey these insights.

If you haven’t already opened the communication lines with your lender, don’t put it off any longer. Start scenario planning with your adviser and explore new finance options, even as you work to maintain your existing arrangement.

Once upon a time (pre-COVID), the focus might have been on profits but right now there is nothing more important than cashflow.

No matter how long you’ve been in business, doing your forecasts the same way you’ve always done them may not be enough of an argument for your finance to remain viable.

Some people will engage a strategy of delaying payments to suppliers

Of course, this provides more cash in the short term. However, the risk of poisoning relationships and jeopardising future supply hardly leaves this as an option. Also consider the flow-on effects to other business owners, who are most likely facing their own very serious cashflow challenge.

Certainly, it makes sense to fast track your own receivables as best you can, perhaps by offering incentives for early payment.

No matter how busy you are staying up to date with the latest COVID compliance and tax relief measures, don’t overlook these critical issues. And remember we’re here to help you breathe easier in the process.


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