A healthy cash flow is important to ensure the smooth running of your business. However, in times of crisis such as the COVID-19 pandemic, this becomes more than important. Managing your cash becomes a necessity for survival. If you are experiencing cash flow troubles, here are five things you can do to create a healthy cash flow.
Check your expenses.
Now is the perfect time to review where your money is going and check which expenses can be minimised or eliminated completely. Re-evaluate your expenses and decide which ones are essential and should stay, and which ones can be trimmed down or cut altogether.
And schedule this to be a regular activity. We recommend at least once every quarter.
Negotiate your debt.
Initiate a discussion with your lenders if interest only or deferred payments on outstanding debts is possible.
Reduce your rent.
Explore if there are any government-backed rent assistance schemes which you could access. These subsidise a portion of your rent and/or require landlords to waive part of it.
Aside from this, you can further reduce your rent by checking if it makes business sense to move to a smaller space, close down other offices or stores that are not performing well, or move to a more affordable commercial space within your budget.
Request more flexible payment options.
It never hurts to ask, especially if you’ve been transacting with your vendors for a long time and you’ve established a certain level of mutual trust and confidence. You can request for more flexible payment options or longer payment terms.
Tap into available credit lines.
Take advantage of available lines of credit and place the funds in interest-bearing accounts.
Assessing your cash flow is fundamental to gaining a better understanding of your business’ financial health. As cash flow experts, we can help you create a healthy cash flow.
At The Healthy Business Lab, we have proprietary tools that can help you monitor and forecast your cashflow position on a daily, weekly, monthly or annual basis. This gives you visibility on where your cash comes in and goes out to, and allows you to plan ahead.
Book a Biz Fit call today for a demo on how we can help.