Page 28 - HC B2B Spring 2020

CASH FLOW BECOMING A PROBLEM?
HERE’S SOME SUGGESTIONS.
By Cathy Burwell
Many small businesses had less than a month’s cash in reserve.
Many of our small businesses have been thrown into a cash flow situation none have ever experienced before. There have been recessions and economic downturns and even shifts to different industries and markets,
but never anything so impactful as these COVID-19 impacts. By the end of March,
the social distancing had shut down or closed more than half of the businesses in the U.S.
A very unprecedented impact that no one
saw coming nor most were not prepared for anything like this. One report said that many small businesses had less than a month’s
cash in reserve (for operations) and even more had less than 3 months reserve. With 3 months of major impact under our belts, many businesses are having some severe impacts. Hopefully, most applied for and received the Paycheck Protection Program which covered 2 1⁄2 months of payroll and rent/mortgage within parameters.
In a report on small business cash flow – 61% of the US small businesses struggle with cash flow (on a regular basis while 32% have such serious issues that they cannot pay vendors, loans, or even pay themselves or employees. With the pandemic, these issues of cashflow have been acerbated to a much greater level.
Here are some recommendations from business consultants:
2. Be mindful of and consider the Government loans and assistance. There are quite a few options being offered – check out the Chamber’s COVID-19 Resource page – and be sure to work with your business banker to see what is best for your business. The SBA is a very good source of information on the PPP and EIDL Loans.
3. Revisit your business plan and see areas where you need to make changes to adapt to the new business climate (at least until all businesses reopen). While you review your business plan (or if you don’t have one, get in touch with MBAC or SCORE for assistance) you should run a risk assessment.
4. Continue to invoice your clients even if you know some will be unable to pay immediately. You don’t know what their reserves are and many businesses have been able to keep up with their payments and bills. Getting payments will help
you keep your cash flow to help you stay ahead of your own bills and payments. Prioritize what has to be paid, what needs to be paid and what can be paid a little late if need be. Call your bank and creditors to see if there is a way to delay payments or lower them temporarily. Delaying the cash output can give you a little breathing space. http://SBA.gov
5. In addition to federal support – be sure to check out any assistance from the state of Montana. There are some stimulus funds available. COVID19RELIEF@mt.gov
6. Ask your customers to support you in this time of need. Some of them perhaps were not heavily impacted, some even had a positive impact as an
1.
Control your inventory of goods and of supplies. If
you are overstocked or have a huge amount of
supplies – this is tying up your cash. Make sure
you keep track of inventory. On the other side of this – ensure you
have ample supplies (enough for
your needs) of items that may be impacted by the purchasing frenzies
that have happened in this pandemic.
28 Business to Business Connection | SPRING 2020