The Government has announced lockdown alert level 4 to prevent the widespread of COVID 19 in the community. It is very challenging for a business to shut down completely if is not an essential business, and thus it is important to know the impact it will have on the cash flow for your business and what you can do to give you the best chance to riding out of the pandemic. Here are some tips for managing cashflow during lockdown
1. Explore any government support
In order to keep the staff during this low/no income period, there are several support schemes from the government: wages subsidy to help in paying the staff and resurgence payment support to help in rent and expenses payment.
2. Consider alternative revenue streams
The Covid-19 pandemic forced lots of businesses to go digital in a massive way. Therefore, it is time to explore an alternative way to generate an income stream and to discover more tools that can help you generate income.
3. Review cashflow budget and adjust accordingly
During this period, you need to regularly review and adjust your cashflow forecast by looking into your ability to pay your supplier. You may need to negotiate with your supplier to seek a payment extension and to contact your landlord to seek possible rent reduction or variations to the lease.
4. Debtor management
Contact your debtors to encourage them to pay early, by offering a discount. If your customer is experiencing cashflow difficulties, you might consider negotiating for a periodic payment. Every little cash inflow helps.
5. Reduce overheads and manage the adequate inventory level
You may also need to consider cutting discretionary overheads such as advertising and consumables. You can also look into steps to increase sales of slow-moving inventory to generate more cash.
6. Assess financial option
You need to actively engage with your bank to ensure your existing lines of credit remain available. At the same time, you may need to explore additional options should they be required.