How Struggling Businesses Can Improve Cash Flow Amidst (and After) a Pandemic
Different service trades are suffering from the hardships of COVID-19 and it’s not business as usual.
Some companies may not survive while others are likely to experience a serious collapse in profits and revenues. Even if we don’t have all the answers in these uncertain times, effective cash flow management is one of the best ways to survive the crisis.
Understanding Business Cash Flow
In business finance terms, cash flow refers to the incoming and outgoing funds that illustrate the operational activities of a company. The business cash flow affects the growth and stance of an organization in either a positive or a negative way. That being said, business owners need to improve their cash flow to obtain business continuity and survive a global economic crisis.
To help you address urgent priorities (including cash flow management), consider this article a master plan that will guide you through times of uncertainty.
File for corporate income tax return.
If your business entitles to receive refundable tax credits under a specific state program, start filing your income tax return as soon as possible. This way helps the company access the cash in a timely manner. You can also take advantage of the government programs that provide benefits in the form of cash assistance to struggling businesses.
Other programs of the government are also helping companies to provide compensation to lay-off employees in order to keep them in the workforce when things return to normal. But make sure to consult your accountant first, given not every company may qualify for these programs.
Negotiate with suppliers.
Depending on the type of industry you are in, if your business has something to do with suppliers, make sure to keep in touch. You’ll want to know the status of their business, especially if this will affect your business stance. Make sure that they will be paid even if it may take you to set up extended payment terms. Remember, your negotiation skills as a leader will help your company survive.
Cut down unhelpful business loans.
Although several lending firms are offering unsecured business loans that do not require collaterals for small businesses, you still have to eliminate some of the loans that you find unhelpful for the company. Or as I have said, utilize your negotiation skills. Remember, financial institutions may not expect perfection but they do want to know what is going on with your business. If you feel like you are going to violate your debt covenants, talk to the bank beforehand. Lenders will understand your financial uncertainties in this trying time but you have to assure them that you are doing all the best you can to mitigate the issue.
Hire freelancers instead of new employees.
Most employees come and go; hence, when things get back to normal and you feel like certain workloads need to be done but no one is available to do them, know that you can actually hire freelancers to work for you on a part-time basis. Consider the benefits that you can get from hiring freelancers who can work remotely, especially in the course of a pandemic. Plus, the best thing about freelancers is that you don’t have to pay them every month nor provide them with benefits such as health insurance policy.
Eliminate unnecessary office space.
If you think there are certain rooms that you find unhelpful, you can choose to eliminate them in order to save from space rentals. Move to a smaller area that is equivalent to the number of your employees. For startups, you can choose to operate your business from home to save you thousands. You can also design a work-from-home setup especially when your business niche doesn’t require an office space to work in.
Minimize the cost of events and out-of-town conferences.
Annual events and out-of-town conferences are innate in a company. When organizing an event, make sure to partner with the event’s specialist that offers a cheaper price of service. Whereas, in place of out-of-town conferences, try video conferencing with clients from around the world instead of consuming time and money for travel.
Sarah Contreras2 Posts
Sarah is a full-time writer, who likes turning ideas into useful words. Aside from writing sonnets at 6 am, she also blogs general issues and smart financing tips. When she’s not writing, she spends her precious little time — thinking of what to write next.