Basically, your cash flow is all about your income, expenses, and expenditure, the movement of money into and from your account, or your business. For you to have a good and positive cash flow, more money needs to be coming in than going out. Positive cash flow means bills, supplier costs, wages, investment, and other expenses can be met on time, but a negative one, of course, means the opposite.
The COVID-19 pandemic hasn’t made things easier, either. For most business owners, there’s a need to maintain and improve cash flow for their businesses to run effectively. This is why we’ve brought you some steps to improve cash flow during this COVID-19 pandemic.
It’s tough not to try to cut costs in times like this. The pandemic has affected the economy significantly, so it’s natural for any business owner to find ways to cut costs. It’s a good strategy during an economic downturn. However, this must be done carefully.
You could put a hold to that graphic design software subscription of yours to save some cash. You could also cut some high-cost PPC campaigns that gulp capital since they won’t be driving many sales right now anyway.
Liquidate Assets If Possible
You should have noticed the products that sell most during this pandemic by now. During an economic downturn, customers are going to be more careful when buying stuff. The trick is to give some sweet offers. Maybe offer discounts on these products with low demands or group them into a bundle with higher-demand items.
Also, you could take a look at your inventory, and if there’s an asset you don’t really need, you should consider liquidating them. You can so resell to other vendors or even a wholesaler at a discount.
Know What’s Going on In the Supply Chain.
It’s all about staying afloat right now, and you don’t want to put yourself in a situation that you wouldn’t like. Supply chain issues are a huge concern that can throw off your cash flow. You wouldn’t want to pay an invoice to a supplier for goods or services, only to find out that they’re lagging due to significant delays or that they’re unable to get the product to you. This may keep your capital tied up together, and this is why you need to stay atop the situation at all times.
Keep Track of Your Expenses
To improve your cash flow, you need to tackle one of the major sources of cash flow problems: unexpected or forgotten expenses. Some expenses are easy to remember while some are not.
Maybe you would need to renew your business license in a month, or it might even be a quarterly payment to one of your consultants or a subscription that you need to be cancelled.
If you forget these expenses before their due date, and you didn’t take into cognizance that you are going to expend them, it may affect your cash flow. This is why it’s good always to keep track of your expenses.
Leverage Relief Programs
Due to the current pandemic, Government and industry organizations in some countries have been issuing out a large number of loans, stimulus packages, and grants for businesses that may need it. As a business owner, you can access these relief programs and get some funds, which will help you to keep your business moving during this trying time plus improving cash flow.
Help Your Customers Too
If you want to help yourself by finding ways to improve your cash flow, then you need to help your customers to stay afloat too. Remember, the pandemic is affecting everybody, and not just your business. The fact is it costs five times more to attract a customer than to retain one. This is why you need to keep your customers on board. You can help them by offering discounts, extended payment terms and also reshape your products and services to fit their needs.
Many places have been on lockdown mode – businesses, organizations, schools, etc. Although these restrictions are vital for public health, it’ll definitely affect the cash flow of any brick and mortar store because social distancing policy is in place, and people are not moving out to buy stuff. However, there is a solution, and it is going virtual. For instance, a fitness trainer that runs a gym can easily offer training sessions via video chat.
Contact Your Credit Card Holders and Lenders
Since everywhere is on lockdown and you can’t move out, consider calling service providers like your credit card company, lenders, cell phone providers, or anywhere you have obligations to make regularly to explain your current situation. After which you can ask them what options are available to you to make payments more flexible.
Above are some steps you could take to improve your business’s cash flow during this COVID-19 pandemic. Indeed, it is a difficult time for everyone. However, efficiently managing your cash flow is one of the best strategies you can employ to keep your business running.
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