If money is not flowing into your business as it used to, managing the cash flow all of a sudden becomes an extremely difficult job. Times like this when an economic turndown has affected the entire world and possibly your business akin, it’s time to roll up your sleeve. Remember that if you weather this storm and successfully keep your operations open, you will emerge stronger when the dust settles. These cash flow management tips will hopefully help you to take a step towards the right direction. If you are stuck at something or unsure of the next steps, remember that we are just a message away:
Cash flow Management Tips – Number 1: Start with the plan
Like anything else, this is the first step. You need to take a deeper dive into the numbers and be aware of what your company’s financial situation is like. Which documents to look into? The financial statements, business or retail reports, all the invoices that you have sent or received. All of these will help you to have a better idea on:
Debt: Clearly understand what total debts are, to whom and when are you expected to make those payments (your payment schedule). The Dubai Government has taken many initiatives to support businesses and credit companies are more likely to provide with some sort of relief. Not everything is out in the public, so make a phone call and ask your creditor if payments can be temporarily suspended for a month or hopefully longer. If you are lucky and have maintained a good payment schedule so far, you can even receive interest rebates and waive offs during times as critical as this.
Cash: Check your statement, know what you have and how long is that supposed to last. Your runaway will help you determine the action items in a prioritized manner in the upcoming days, weeks and months.
Inventory: Is a lot of your capital stuck because it’s tied up with the inventory? Do you have a good deal of perishable goods? Is it possible for you to liquidate a part of your equity? Ask these questions first and take due action accordingly. If your business is still running its operation, is there any way you can present the most valuable items from your inventory in front of the customers and take some burden off the inventory?
Cash flow Management Tips – Number 2: Cut Spending
When a business thinks of cutting spending, the first thing that comes to a lot of people’s minds is terminating jobs. However, I am not here to advise that. Start with your business credit card or bank account statement for the last few months. Then make a list of different areas where you spend money and put those into two brackets: needs and wants. So for example: office space, salary expenses, marketing, utilities, any software – these are all your business needs. On the other hand, underused subscriptions, travel costs are certainly on the wants side. The first step is to pretty much all but eliminate the wants. Even for needs, there are creative ways to cut down the expenses.
Do you need a large office space now as practically (Depends on the business though), a lot of your workforce is working from home? Or is there a way you can negotiate better rental agreements (You are likely to find success with this as many Dubai commercial real estate agents are losing clients and are in a sort of desperate need to gain new customers).
Similarly, for utilities, go for a lower plan. Try to find a way of downgrading software subscriptions. If all of these don’t help, probably salary cut is an option that you can consider too. However, always remember, your employees will make or break your business and it’s important to take care of them as much as possible, even during critical times such as this.
Cash flow Management Tips – Number 3: Optimize Marketing
Trimming down on marketing is a mistake a lot of businesses make during economic difficulties. Well, certainly the budget will be affected but more important is to understand which channels are bringing you better ROI and have a renewed focus on those. Try to be creative and make your business situation friendly. Do you have a product that will help people working from home? Do you sell something that keeps people healthy, particularly when they don’t move a lot? If yes, those are your golden ticket products and try to unleash the best marketing strategy to get these out in front of the intended customers.
Tough economic times are not particularly anyone’s favorite but ensure that these testing times don’t define you. If you need someone to talk to, remember we, at FinFlx, are always happy to help.