By Lou Zandrian Lobrin
Businesses across industries have felt the damaging effects of the COVID-19 crisis. With the lack of reliable public transportation and limitations on non-essential purchases, small businesses have especially suffered from the aftermath of these public health and safety measures.
In order to survive and thrive in the “new normal,” it is crucial for small businesses to bolster their cash flow. This article will discuss how businesses can do that. (Also see: financial tips for small businesses to survive the Coronavirus pandemic).
- Get a full picture of your financial status
Before making any moves, it is necessary to understand the extent of your losses. Take into account all pending receivables and payables, as well as the state of your working capital. Write down all possible impacts of the current situation on your business—sales, staff availability, supply chain, finances, etc.
With these factors in mind, you can start creating frequent and regular forecasts of your cash flow based on the news and information on the situation at large, your customers, suppliers, and the like.
Having all of these details can aid in anchoring your operation plans and making informed decisions to help your business weather the crisis.
- Regularly check and monitor your cash flow
Cash flow represents the lifeblood of any business. In these uncertain times, keeping a close eye on your cash flow with even more rigor is necessary for survival. Not only does regular and frequent monitoring help avoid accounting mistakes, but it also gives you real data to compare your initial forecasts to.
If your predictions are not lining up with the actual results, you may need to switch gears and change your approach to operations. With close monitoring, you’ll be able to catch any problem before it gets worse.
- Streamline client payments
To increase liquidity quickly, you need to make it easier for clients to pay you. From changing the layout of the invoice and reaching out to clients with pending billings, to offering more payment platforms and billing promptly, these are many ways you can reduce friction in the payment process.
Creating incentives for prompt or early payments, such as discounts, can also make billing easier for both you and your clients. The goal is to make payment easier for your clients, allowing you to accrue more cash quicker than before.
- Explore alternative financing options
Keeping your cash flow healthy will involve maximizing all sources of cash in the current crisis. Alternative financing options include business loans from banks or private lenders, emergency government benefits, fintech products, and private sector programs.
By applying for these forms of financial aid, you can keep your business liquid and stay operational.
- Re-evaluate budgeting
It is clear that in the current state of public health and safety, cash reserves are sure to be lower or stay in a state of flux. It is not enough to find alternative sources of capital—you will need to examine your budget and prioritize more essential expenses over others.
Look at your overall spending and determine which aspects of your budget can be lowered or removed altogether, and shuffled into aspects that are more important or more pressing. This will require a more austere approach, such as accounting for a substantial decline in sales or lack of supply due to suspended logistics.
It is also important to take into account any waived fees and expenses, as well as deferred, extended, or delayed payments for taxes, rent, and the like. Knowing that you can opt to skip on these payments at the moment can help you address more immediate financial concerns with less worry.
- Boost digital presence and sales
As mentioned earlier, limited travel options can affect storefront traffic and sales. The way around this is to make the shift to online platforms. Maximize digital marketing efforts through social media. SMS marketing efforts can also be used to bolster pre-existing digital marketing.
Depending on the nature of your business, you may also consider shifting your transactions to an ecommerce site.
Despite the struggles your business is currently facing, there is an end to the outbreak. Staying on top of your cash flow will play a vital role in helping you come out of this crisis and begin rebuilding. It’s a matter of paying attention to your finances and maximizing all opportunities to make the most of your money.
Author Bio: Lou Zandrian Lobrin is Marketing & Sustainability Manager of Esquire Financing, a lending firm offering non-collateral business loans to Small and Medium Enterprises (SMEs). He enjoys travelling, cultural immersion and meeting new people outside work.