When our community undergoes a period of economic uncertainty, one of the most unsettling financial experiences is to question your stream of cash flow. Business owners and employees alike risk financial stability and loss of income when the economy takes a sudden downturn. Although we cannot stop a recession from happening, here are a few tips to curb the impact of a sudden crisis on your cash flow.
- Get a bird’s eye view of your cash flow. When you have a good understanding of your monthly cash flow, you can better forecast your financial situation in the future. Take a look at your statements and identify profits, bills, payroll, inventory, debt, etc. to understand which expenses are fixed, and which expenses can be prevented. Consider cutting back on nonessential inventory for the time being.
- Offer discounts for pre-paid services. This is a good way to ensure timely income, or to encourage clients and customers to pay early.
- Reevaluate your invoicing habits. Avoid sending out invoices at the end of the month if you want your cash to transfer into your bank account sooner. Offering your clients direct deposit, an option to pay through a payment app, or other digital means can allow them to pay much faster.
- Consider applying for a business loan. The Small Business Administration (SBA) offers a low interest loan called the Economic Injury Disaster Loan for small businesses and nonprofits who are seeking financial assistance during times of crisis. In response to the coronavirus, the SBA is also offering the Paycheck Protection Program (PPP) to help business owners keep their employees on payroll and support other various operational costs. The new deadline for this loan is August 8, 2020.
- Consult your bookkeeper. Get in touch with your bookkeeper for a holistic understanding of your business’ financial health. At Bakersmith Bookkeeping Group, we can help you identify non-essential spending to cut costs and save, provide timely invoices, and make sure that your employees are getting paid on time during times of crisis. Visit our website for more tips and financial support for your business.