Managing Cash Flow During Troubling Times

First and foremost, we hope that you and your families are staying safe and are coping in these turbulent times.

We are all doing everything we can to stay healthy – washing our hands, working remotely, practicing social distancing. We also need to think about what we can do to promote the health of our companies, starting with cash flow. 

We put together these simple tips and resources to help you more proactively manage your cash flow – the lifeblood of every business. 

1. 1. 1. 1. Prepare for Every Possibility. Do a simple cash flow projection to model out the worst-case scenario so you can be prepared for it. That may mean being ready to tap into a line of credit, apply for an SBA loan, or drastically cut expenses. (See our post here for tips on how to create this type of projection).

1. 1. 1. 2. Prioritize Payroll. Above all, do not be tempted to delay remitting payroll withholdings such as 401k deferrals or payroll taxes. Payroll deductions are legally employees’ money and your company has a fiduciary responsibility to remit the payments timely. 

1. 1. 1. 3. Focus on Collections. Be diligent about collecting your receivables. Consider offering discounts for customers who pay on time. Also consider accepting ACH and credit card payments which can speed up your collections significantly. Work with your bank to set up remote deposit so checks can be deposited quickly and efficiently. 

1. 1. 1. 4. Negotiate With Vendors. Contact your vendors and negotiate longer payment terms and/or discounts for early payment. Ask your landlord for a rent holiday. Remember that your a/p is your vendor’s a/r and they may be having cash flow issues as well. We recommend prioritizing payments to vendors who may also be suffering from cash flow problems.

1. 1. 1. 5. Reduce Your Loan and Credit Card Payments. Now is a good opportunity to negotiate lower interest rates and longer payment terms from your bank and credit card companies. They have a vested interest in helping you stay in business.
         6. Anticipate Downsizing. We all know that “cutting expenses” or “reducing cash burn” are usually euphemisms for layoffs. Many states have Work Share programs as an alternative to layoffs during times of reduced business activity. Employers reduce the pay and the number of hours employees work. Employees can receive a portion of their unemployment benefits from the state. The employer must apply for the program, so check with your state unemployment department to determine how to apply. Here is the link for Massachusetts.

         7. Avail Yourself of the SBA’s Economic Injury Disaster Loan. Not surprisingly, loan application volume has increased dramatically. The sooner you get your application in the queue the better. The following are useful resources to understand the program and its potential benefits to you. 

            Guide to the SBA Economic Injury Disaster Loan 

            Note: Since this original post was published, the SBA Economic Injury Disaster Loan program was closed as of May 6, 2022. Check out traditional SBA loan options here.

         8. Everyone CARES. Contact your bank to get information on securing emergency loans through the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. These loans are federally guaranteed and are forgiven if employers continue to pay their workers for the duration of the crisis. 

Most importantly, stay safe and healthy. We will all get through this crisis by working together.  

ABOUT JUNA FINANCIAL SOLUTIONS

We are available to discuss your options and help you minimize the potential economic impact of the Coronavirus pandemic on your company. You can contact us at info@junafinancial.com.