Cash is King. How can we ensure we can come out safe and sound especially in this current COVID 19 business situation?
How can you avoid or minimize the impact of a cash emergency? Managing cash flow is every company’s challenge, every day, every year. Top management who keep a close eye on their daily activity and emerging industry trends can help reduce their company’s exposure to the chill of a cash crunch. In an increasingly competitive world, you need to be alert.
I don’t know about you, but I feel like I am training for a marathon with this pandemic. I have actually run a handful of marathons in years past. The weeks we are right now would be called the messy middle of marathon training, You know COVID 19 & Business.. when you have to wake up again and go through the motions of running routine with seemingly no progress. There are feelings of uncertainty, fear, crisis, friction, and ambiguity. The ticket to success and endurance in training for a marathon is persistence. Grit. Hope. Innovation. Trying something new and not giving up on hard things. Optimism
The reality is harsh. Ever since the Coronavirus hit the town, our stocks, our bank accounts, and even jobs have been taking an even bigger hit. If you are the CEO driving on the road, Congratulations- You have more control of your money. However, you are also in for a lot of work.
You are right. We are in the turbulent times now. The market is unpredictable. Now is the best time to be both tactical and strategic in your next moves to improve and increase cash flow and increase profit. We have useful ideas for you to pick and apply to what suits you the best during the aftermaths of the Coronavirus Outbreak.
My clients have been working with me, had gone into a great discussion on how they could get their companies into tip-top form at this point in time.
It has been a long way before we get back to where we were before the virus hit. “We need to face this positively. There is always a way to everything.” I assured them.
Think from your clients’ perspective
Think about your clients and their current situations. What caused the problem? Economy slowdown results in customers stretching out their payables. Prepayments and overdue settlement take place for customers to take advantage of special discounts that can reduce cash at their end. What could be acceptable to them would be at our advantage.
How can you cope? If cash on hand is not robust, let the special discounts go. It’s usually more cost-effective to pass on a discount than to borrow to overcome a shortfall. Keep up on the news.
Creative in Product/Service delivery
If you hear about any threatened disruptions to your supply chain, make sure you have a back-up position. Even if temporarily more expensive, it can save your business by showing your customers your reliability and versatility in challenging times. If your customers are in industries facing hard economic times, keep closer tabs on your credit policies, and be active in collections. If necessary, tighten credit terms, but use discretion. Being firm but supportive to your customers will go a long way in keeping them in the fold while still giving you better cash flow. Negotiate extended payments if cash gets short.
Think about different ways in which you can deliver your service via online platforms, Most importantly, document both the signals of problems and your solutions. That way, if the signals happen again, you can refer to prior successful action as the first possible solution.
Imagine possible, but normally unpredictable cash flow challenges. Some problems can’t be anticipated, so “what if” scenarios can be created. You don’t have to get elaborate, but you can ask what would happen if there were a flood, or, as we’ve experienced more recently, a devastating hurricane. What then? Other problems, such as “product sabotage” can only be dealt with as they occur. Constructing possible scenarios to reduce risks associated with “unforeseeable” problems is an important management tool. Learn from, and document, each experience, or you may have to repeat it.
Look at your sales. Any prolonged (and “prolonged” computes differently for each company and industry) drop in sales without a comparable and simultaneously emerging reduction in expenses is a prescription for trouble. Of course, there is usually some lag between sales changes and a compensating contraction in expenses, but an early diagnosis can reduce the negative impacts significantly. Once a changing trend has been identified, act promptly or the impact of the lag will be more severe.
If ongoing operations cannot be supported by sales, either more sales are needed, fewer expenses must be incurred or a combination of the two is in order. While this sounds very simple, all too many companies hesitate “in hopeful anticipation.” If remedies are not introduced on a timely basis, a severe cash crunch could follow. We can help in such cases.
Keep up to date with the latest
Fourth, keep a close eye on new product development. In many companies, R&D expenditures for new products are often allowed far greater variance from projected budgets than normal expenditures. After all, when you create something new, it is really hard to accurately predict costs — or turnaround time — at the outset.
Failure to keep these costs, and time commitments, within bounds or monitor their continuing impact and cost/benefit can lead to continued funding of projects well beyond when they should be cut off. Overall cash flow can be easily drained into a seemingly bottomless pit, and often an entire company is jeopardized by one errant project.
Many cash flow challenges have such simple origins. Often it’s simply a matter of days or weeks and they can creep up on you. And the daily grind can cloud your vision, encourages false hope, or distract you just long enough for problems to take hold. You can learn from the past or current cash shortages. You can be watchful that sales, budget, and R&D costs stay in line. You can keep a lid on pet projects. In an increasingly competitive world, you need to be alert.
You need to capture what you want to achieve for our business in order to analyze processes. You will then receive the assessment and best practices in building and improving to optimize business. The scope of analysis can stretch from process improvement, organizational change, strategic planning, and policy improvement.
We hope for world peace and Virus-free the shortest time possible. Now that you understand what the CEO knows is not something unachievable, you can apply this knowledge so that you can see future profits.
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Thank you so much for reading! Make today the best day ever!