How to manage cash flow in a crisis

The world economy is sitting on the edge of a severe slowdown with the outbreak of COVID-19 flu ongoing. Businesses are bracing for the worst, with many likely to be put to the test – some on their ability to stay afloat, while for others, their ability to pounce on opportunities a slowdown presents. What is common between them is their ability to manage cash flow in a crisis. In this post, we share three tips you can consider for your small business.

1. Cash is king

Hopefully, when the going was good, you had built substantial cash reserves. In times of crisis, cash is the only currency that matters. It contributes directly to the agility of your company to move in any direction appropriate for it. If you’ve not built your business’s cash reserves, it isn’t too late to start. Ramping up sales, tightening business operations or liquidating some of your assets are steps you can consider. Cash in times of crisis can either be your fire extinguisher or mojo.

2. Be creditworthy

The good times will return. It’s the circle of life – what goes down will rise again. Your suppliers have a vested interest in making sure you rise if you’ve fallen or you do not fall to begin with. It doesn’t make good business sense for them to see you trip and fall. If you’ve been a good customer, there’s a high chance they’ll work with you for mutually beneficial terms of payment. But start the negotiation process early.

3. Keeping the lines of communication open

Both internal and external, it’s good to keep everyone in the loop of the company’s financial well-being in a crisis. Some business owners may shudder at the thought of discussing finances with customers and suppliers. But the fact is, in a national or global crisis, they too may be impacted. They will be empathetic and hopefully accommodating as well.

Effective cash flow management in a crisis is vital. It can make or break the company. Speak to us to fortify your business’s financial well-being in a crisis and manage cash flow. Contact Sydney Accounting today by calling 02 9810 3222.