In times like the current ones, with the COVID-19 pandemic, what could previously mean best practices may become survival needs. If you're concerned about your company's cash flow, you should be aware of some aspects that can help provide access to capital and expand what you already have. For some companies, there are actions that are already part of the organization's culture, but in other cases a change in management vision is necessary.
Before taking any action, it is recommended to separate planning into two main categories: operation and investment/financing. Although operations tend to have an immediate effect, but with less impact, both categories can have positive effects on cash flow.
Within the scope of operating cash flows, you must first work with the projections. By completing a cash flow projection, you will know how aggressive your actions need to prove. Analyze how much time you have, if you have enough for days, a month, a week. Then, you can prepare a schedule per project, so that you have metrics and know who is helping and who may be harming. Be as diligent as possible with regard to billing and overcharges by following up with the confirmations of receipt of the invoices.
In accounts receivable, delegate it to an employee to track the collections promptly, calling the due date and recording appropriate liens in a timely manner to preserve your rights. If you have delinquents, it's time to follow up on them too. As for accounts payable, be sure to follow up on bills regularly, including early discounts. You can check the vendors that accept credit cards for settlement, so you save extra time without interest in cash flow.
The Payroll and Benefits area also requires a lot of attention. Failure to pay payroll taxes can result in high fines, so it's important to check in times of crisis whether employees accept a reduction in workload to avoid layoffs. And if they are essential, it is important to keep up to date with labor laws, to be aware of the periods and legal rules of dismissal.
If the crisis really brings your company to that point, operational changes alone may not be sufficient for its continuity. Then, for more substantial access to capital, you can adopt funding/investment tactics. At these times, incentives arise to help affected borrowers, from deferring payments to significantly reducing interest. Talk to your bank to schedule payments and also consider an increase in your credit line to help with future cash flow restrictions. Loans are also a good option for emergency capital.
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