Managing Cash Flow During a Crisis


Even the best-run businesses didn’t have a plan for managing finances during a black swan event like a virus that “hit pause” on the global economy. Companies of all sizes find themselves charting an unexpected path with an unclear future in the short term. Yet there are still bills to pay, and you need to figure out how to best manage the cash you do have to meet those financial obligations.

Increase Cash Flow Now

If your business is closed, you probably aren’t bringing in much cash to manage. Fortunately, there are several new resources available to help businesses bridge the gap.

First, the CARES Act provides $2 trillion in various funding and resources. Portions of the law likely to be useful to contractors include the Paycheck Protection Program, which provides loans to small businesses to maintain payroll. The loans can be forgiven if your company meets certain conditions. Other options include an expansion of Economic Injury Disaster Loans and a few tax changes including delayed payment deadlines and new credits.

The U.S. Chamber of Commerce provides details on each available program within the CARES Act; you can visit the U.S. Small Business Administration site for details on where and how to apply.

Private entities are also providing resources to help small businesses. For example, Google is providing hundreds of millions of dollars in small business aid (much of it in the form of Google Ad credits). Check for similar local programs that your business may qualify for.

Manage Debt and Expenses

To make the most of the cash you have (or loans you receive) you need to take a critical eye to your expenses and find ways to minimize them. This can include finding ways to reduce payroll costs – if possible, without laying off employees. Laying off workers can increase your costs when they claim unemployment. Review your options carefully before implementing any plan.

As you review those costs, remember that your workers are one of your most important assets. They are hard to replace when business does pick up again and the cost of doing so is hard to quantify. If you can keep them on staff by working reduced hours, it can help their morale and keep your company positioned for when business picks up again.

If you are struggling to keep up with payments for debts and ongoing expenses, communication is key. You can improve your chances of avoiding problems by getting in touch early, sharing what you are doing to meet your obligations, and being transparent about what accommodations would help you the most – whether that’s lower interest rates, a delayed payment, etc. Not every vendor will be able to help, but given how all-encompassing the COVID-19 crisis is, some companies are realizing they need to be flexible with their own customers for everyone’s mutual survival.

Plan for the Short- and Long-Term

Eventually this crisis will subside, but even the economists can’t predict when that will be or what condition the economy will be in. In lieu of facts, companies are best advised to stay flexible so that when things do reopen, they are ready to capture whatever pent-up demand there is.

The COVID-19 pandemic and related business closures is a unique event. Companies can’t rely on history to figure out what the recovery will look like. So run different scenarios (a major recession, a quick reopening of business, a long closure of business, supply chain issues, etc.) and plan for as many contingencies as possible.

One thing you might not want to do in the short term is adjust your sales targets. Gartner Group recently advised companies that it’s too early and too much is unknown to start revising them. Their advice: take a wait-and-see approach for now and be ready for anything.

Once the markets start to recover, more opportunities for increasing sales will open. Try to use this time to prepare – whether that means getting additional training or refining marketing materials. You want your team to have a plan for the recovery so they can maximize their results once demand picks up again.

This is an unprecedented event for which companies never planned. Taking a few small steps now can help your company weather the current situation and be as prepared as possible to pick up where things left off once the economy opens again.


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