5 quick win crisis cashflow management tips

crisis cashflow management

Every SME knows what it's like when invoices are all out, but there's still no payment on the way... You’ve brought business in, you've worked hard, and you've got every expectation that you will be able to pay the bills. The problem is that often your customers will pass on their cash flow problems to you.

Even in normal trading times it often feels like there’s a lot more money going out of a business than there is coming in. Add in a pandemic with an uncertain end date that’s causing closures, restrictions or (in some ways more positively) an unprecedented demand for your stock and its a recipe for a cash flow challenge.

At this time, not many businesses have the time for long-term business change programmes that might ease matters. There however are some quick fixes that can form part of your crisis cashflow management plan. 

To help your business quickly address some cash flow issues, we will take a look at some quick wins to address cash flow issues and allow you to take control of your business.

1. Find out who owes you money and talk to them. 

Compiling an up to date Accounts Receivable (people that owe you money) list is essential to a successful crisis cashflow managment plan. It however is only useful if you closely monitor it and engage appropriately with each creditor. Offer discounts to customers who settle their bills early,  issue invoices promptly and follow up immediately if payments lag.

For new orders, insist on credit checks on all new non-cash payment customers and try to get upfront deposits as orders are made.

It’s important to be aware that many of these customers are going through the same issues as you, and you may want them to come back to you again in future, so its important to keep the conversation constructive and empathetic.

From our own experience working with borrowers who have missed loan repayments, being understanding and pragmatic goes a long way to getting payments back on track. Be creative by exploring phased repayments or agreeing new payment dates that you can both stick to and plan against.

2. Careful Purchasing

Take a second look at that stock order list before you or your employees buy. Just because you’ve bought the same stock and the same quantities for the last few years, the unprecedented situation at present means that customer demand, preferences, needs and tastes may have changed. This may seem obvious but its worth spending the time go through orders with a “finer toothcomb” than you may have done in the past.

3. Your suppliers – don’t ask, don’t get

In the same way as you would compile an Accounts Receivable list, also compile an Accounts Payable list as part of your crisis cashflow management plan. Your business is valuable to other businesses, so take the opportunity now to put those relationships to the test. Talk to your suppliers about discounts or other mutually acceptable ways to work together that will reduce or delay your outgoings resulting in a short term benefit for you and a long term benefit for your suppliers.

In particular, speak to your utility providers about discounts and alternative payment plans. Shop around for quotes as comparisons.

While there is no blanket postponement of business rates across the country, most county councils have a process to review the delay of business rate payments on a case by case basis.

4. Get support

There are a wide range of supports and grants available from international, national and regional government bodies and agencies that are designed to help your business weather the Covid-19 storm and to help your business grow. Here are a few places to start looking:

The Local Enterprise Office offer a range of supports for smaller businesses on their response hub, including a Business Continuity Voucher to help you develop short and long term strategies to respond to the Covid-19 crisis.

Enterprise Ireland Clients can avail of a range of strategic marketing and other voucher schemes through their support schemes.

Businesses located in a Gaeltacht region can also avail of schemes though Údarás na Gaeltachta.

5. Consider a working capital loan as part of your crisis cashflow management plan

Given how long it can often take to get a loan arranged through your bank, this may not feel like a quick fix. However, the non-bank lending sector has grown rapidly in recent years and provides a real alternative to the “slow-nos” pillar banks.

Even if you don’t need the finance right now, its worth thinking about your future requirements. Your business will be perceived much more favourably during a credit review when your bank statements and accounts can demonstrate several months of active trading before the crisis hit. 

Linked Finance provides fast, affordable business loans to support your working capital requirements. Finance is provided by our highly engaged network of lenders, many of whom are business owners like you. We offer access to finance quickly and with minimal paperwork.  What’s more, there are no drawdown conditions attached and no assets are secured against the loan.

If it’s time to apply for your working capital loan then Linked Finance can help.  Apply now.

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