Managing cashflow during a crisis
Who would have predicted a global pandemic? COVID-19 took the world by surprise. The full impact of the pandemic to businesses is still quite unknown. However, the focus of most businesses is now on protecting employees, understanding the risks to their business, and managing the supply chain disruptions caused by the efforts to contain the spread of COVID-19. One thing which is certain from research conducted, is those companies who were managing cashflow during a crisis where those who were more likely to survive.
Throughout history there have been numerous events which in turn have caused disruption to businesses globally. These include the SARs outbreak in 2003, recession and credit crunch in 2008 and the Japanese earth-quake in 2011.
Below we outline 8 tips for managing cashflow during a crisis for your business.
CASHFLOW PLANNING CHECKLIST
Check if your invoices need to be sent to different email addresses or locations.
Check to see if customers will be paying from different banks? Ensure they reference what invoice they are paying when payment is made.
Contact your customers to see if they have cash available to pay you and run regular credit checks. If they are struggling perhaps negotiate a formal payment plan.
Consider changing your payment terms temporarily, although doing so could alienate your customers.
Review your ledgers to ensure you have contacted all customers with invoices due now.
Do your Accounts Receivable/Accounts Payable processes need to change due to current restrictions?
Communication is key! Keep in regular contact with your customers for updates on how they are progressing.
Complete cashflow forecasts for worst case scenarios. Consider the fact that some of your customers may go out of business!
Know Your Numbers
A business owner should always “know their numbers”, what is coming into their business, what is going out. It is always important to understand your cash flow and be aware of improvements, savings and forecasts.
Consistent and regular cashflow is the key to ensuring your business stays a float. During times where you need to adapt or “Pivot”, put changes in place quickly and promote to your low risk customers.