The biggest challenge for businesses during the ongoing crisis is money management. Nothing matters more than keeping your cash flow in place during a period of an economic downturn and uncertain demand. It becomes all the more stressful as you have to handle regular expenses and dwindling sales. Fortunately, a little planning and foresightedness can take you a long way in keeping your finances afloat during tough times like these. Here are some smart steps that can help business owners manage money during a crisis.
Stay on top of receipts and payments
When it comes to managing your money during a crisis, staying on top of business receipts and payments is crucial. Keeping track of accounts receivable and ensuring that all your invoices are cleared on time will prevent bottlenecks. On the payments side, seek discounts and request extensions where possible. But you should also avoid penalties and negative impacts on vendor relationships due to delays and missed payments.
Optimize your inventory
Both overstocking and understocking can be a problem for your cash flow during an extended crisis. It is important to optimize your inventory levels to make sure that you are always in a position to fulfill the demand but never block your money in excessive stocks. You need to understand your cash conversion cycle and then replenish your stock accordingly to keep it at just the right level.
Ensure borrowing ability
When the money runs tight, you may have to borrow to address bottlenecks and keep your business afloat. You must ensure that getting a loan isn’t a problem at any point. Your personal credit score is as valuable as business credibility. Fortunately, there are options in loans for average credit, so you need not panic even if you don’t have a great credit score. Keep track of these options, and you will not have to struggle for survival when things get really bad.
Good money management is easy if you can control overhead costs for your business. Curb every single expense you can, from your advertising costs to phone plans, travel expenses, and power bills. Every dollar saved can stabilize your cash position and improve the chances of survival even during the most challenging phase. You need not do much to deal with overheads. Simply stop spending where possible or look for cheaper alternatives where you cannot close the expenses completely.
Adapt to find alternative revenue streams
Another smart move to make money management easy in a crisis is to look for alternative revenue streams that keep your cash flowing. For example, retailers missing out on brick-and-mortar sales can move to curbside pickups and home delivery to make up for the lost sales. Switching over to the e-commerce model for the long run is also a good idea. As long as a change brings in cash, it is worth investing in.
Managing money during a crisis is challenging but not impossible. Just following these simple steps can help you stay a step ahead and ensure the financial health of your business even amid the pandemic.