It’s hard to believe that less than 9 months ago COVID-19 was completely unknown. Today, it has affected virtually every company in the world and caused massive economic disruption. Flourishing economies are entering recession and successful businesses are struggling to stay afloat.
COVID-19 cases appear to be rising again, undoubtedly affecting your cash flow further. Cash flow management during this period is essential if your business is going to survive.
Managing Cash Flow
You should already be monitoring and managing your cashflow. But, if you’re not then now is definitely the time to start!
In essence, you’ll need to record al your known outgoings. That’s the bills that keep your business running. This should include utility bills, rent, wages, insurance, machinery running costs, finance payments, and anything else you can think of.
Then, list your expected income. This is unlikely to be as high as in previous years. It’s important to be realistic when creating income figures. The difference between these and your expenditure is how much money you’re missing from your cash flow and need to find.
Overestimating your income can make a serious difference in your ability to manage cash flow. It’s safer to underestimate.
When you’re analyzing your current cash flow it’s worth spending a few minutes ensuring that all our payments are justified and necessary. If you can stop paying anything by terminating contracts you should do so. It’s a great opportunity to streamline your finances!
Before you do anything else it is worth taking a look at what government aid may be available. Depending on the size of your business and the downturn you’re experiencing, you may be able to access commercial tenant relief. This will help to ensure you can keep your premises even when the funds aren’t there.
It’s also likely you’ll qualify for JobKeeper payments that are designed to ensure your staff continues to get paid. As this can be a significant expense it’s a welcome addition and can really help your cash flow situation.
There are several other options when considering accessing government financial assistance. It’s important to check what you’re entitled to.
There is an array of business finance options that are worth considering and can make a sizeable difference to your ability to pay staff and keep your business running.
If you already provide credit for your customers you can use invoice factoring to release the majority of the funds at the point of invoice. You can also borrow to help pay employees wages, obtain asset finance, or even refinance your business.
It’s best to talk to the professionals regarding the business finance options. This will help to ensure you choose the best option for your business.
With the right support, patience, and cash flow management, you and your business can survive the COVID-19 pandemic.
Don’t forget, the pandemic is constantly changing. That means your cash flow forecasts will need to be upgraded constantly. Knowing the funds you have available and what you’re missing will make it much easier for you to weather the pandemic.