Cash Management - 3 Things You Can Do Today
Updated: May 3, 2020
In these strange times, when we don't know if tomorrow's news will slow things down further, we're vulnerable to cash shortages. Cash represents our ability as business owners to make payroll, keep the lights on, buy supplies to make more product or deliver more services. Cash management is key to survival in a crunch.
Here are three things you can do immediately, from your home office if necessary:
1. Call your vendors, creditors, landlord, banks. Do they have a short term program in place to help other customers? If not, at least let them know you're managing the situation and intend to survive. Make sure they know how to contact you. Tell them you'll do your best to make payments, but tell them you may need extra time. Tell them that if you do, you'll let them know.
This action is important - most business owners are afraid to say they are strapped, and hope the situation will improve by some miracle. The creditor doesn't know this, and needs to be aggressive to become a creditor of record in the event of a bankruptcy. Communication heads off this automatic response.
2. Call your customers. First, ask about them! Then tell them you're still open (or partially open, or when you intend to reopen) for business and that their loyalty will help you stay that way. Ask for their business now. They may not be able to help immediately, but you're setting the stage for a conversation that represents you as working together, rather than both buried in your own issues.
3. Call the Accounts Payable officer of all your customers. Explain that you're small enough that, while you signed on to their 60 day payment terms at the beginning, this is an extraordinary situation and they could really help a dedicated partner like you if they would allow you to mark your invoices Due on Receipt. If they won't, try for 15 or 30. Tell them you're willing to go back to the prior arrangement after some time, but right now you need to preserve cash to make sure you don't have to lay off staff, critical staff needed to keep their orders filled.
Good luck, and feel free to reach out if you have other easy ideas like these! I'll always carve out time to chat by phone.