9 Cashflow Strategies to Survive the Covid-19 Crisis

Sept 17 2020
By Peter Lam/ Pelican Concepts PLT

9 Cashflow Strategies to Survive the Covid-19 Crisis

Cash flow Planning for Sailing Through Tough Times

At the end of the day, whatever Stimulus Package the government may provide, it’s all about financial management and in particular Cash Flow management during this tough period.

If your business can survive the next 6 months (since the beginning of the crisis) and potentially recover, then you must pay attention to the following.

Priority First Step

In addition to scenario planning for the next 12-18 months, the most important first step is to draw up a 13-week Rolling Cashflow Forecast. Most accountants will do a month-by-month 12 month forecast. In times of crisis this is not good enough. You need a 13-week, week-by-week rolling forecast. This simple tool is your most important dashboard during this crisis.

You start by knowing how much cash you have and how much cash you expect to flow into your business for the next 13 weeks. Deduct from this all your projected payments and expenses each week and you will see your cash position each week. Week by week.

The first time this is established is painful hard work. But you have no choice. This is a MUST DO, no compromise.

Once you do the first one, each week requires updating and adding another week forward to compensate the week that just passed. This allows you to see your cash position 13 weeks forward. It helps avoid being caught with a cash flow crunch you missed picking up, allowing you to plan accordingly.


[You can email success@peterlamcoach.com for a Free 13-week Rolling Cashflow Forecast template]
 

A. Strategies when facing cashflow challenges

  1. Aggressively collect debt and receivables. Be gentle in your approach, especially when calling your debtors. Be understanding but, you must also be firm in reaching some agreements on payment timings.

  2. Start “cash on delivery” terms if this is not already a practice. Give one-off special discounts for cash purchases if necessary, to get customers started on this.

  3. Give a better price for advance orders with payment made (eg. for orders from April to June). At least secure a deposit or partial payment.

  4. Clear all stocks. Convert your inventory into cash, even old/slow-moving items. Offer special deals to your best customers.

  5. Request longer terms from suppliers. Negotiate and seek support and understanding. Talk to all your creditors if you have to delay payments but keep your commitments.

  6. Sell possible non-critical assets to get cash (eg cars that are seldom used or equipment that is under-utilized)

  7. Sell shares - get a potential new partner/investor with strong cash flow to pump money into your business.

  8. Generate new income streams -look for platforms and networks to start online business and collaboration

  9. Secure financing or refinancing from banks/financial institutions. Consider P2P financing or factoring.

Contributed by Peter Lam founder of Pelican Concepts PLT and award-winning author of ProfitMAX Your Business. For more information, please visit www.peterlamcoach.com or email your inquiry to peter@peterlamcoach.com
 

B. Cost Cutting Strategies

  1. Re-negotiate rental with your landlord

  2. Review your budget. Stop all unnecessary expenses (newspaper subscriptions, etc). Close down unprofitable branches/outlets and unprofitable or irrelevant businesses. Focus on cash and profit generators.

  3. Progressively reduce staff allowance, then salaries

  4. Rethink using optimum manpower for pivoting to a new business model


The moral is – always build up cash reserves!



Contributed by Peter Lam founder of Pelican Concepts PLT and award-winning author of ProfitMAX Your Business. Please visit www.peterlamcoach.com for more info.