Keep Cash Flowing in a Crisis  

As you know, the COVID-19 pandemic is challenging small businesses like never before. These are incredibly difficult, frightening times, and the temptation is to either panic or hold still and brace for impact.

 

A better way forward? Return to the fundamentals. Start by conducting a boring old cash flow analysis—which these days is not boring at all. In fact, it might well send your heart rate skyward, but it will also provide valuable insights that will enable you to formulate a plan for the weeks and months ahead.

 

What is a cash flow analysis?

A cash flow analysis is basically a deep look into the inflows and outflows of your business, including:

  • Accounts payable
  • Accounts receivable
  • Inventory
  • Credit terms
  • Depreciation
  • Accrued expenses

 

Why spend time on a cash flow analysis during a crisis?

Cash flow analyses are most valuable during periods of change—when you’re a startup, when you’re expanding fast, when your business is changing fast. The latter is what’s happening now, as just about every small business is going through unprecedented changes. Now is exactly the right time to identify cash flow problems and opportunities that can help you survive the coronavirus crisis.

 

What tools will help?

Hopefully you have advanced ERP software like Sage Intacct, the best-in-class cloud-based accounting software solution, which will make it easy to run a detailed cash flow analysis. You’ll also want to adjust your budget forecasting models in real time, if possible, so you can forecast how different operational changes might affect your profitability.

 

What are you looking for?

In short, you’re looking for ideas and opportunities when you run a cash flow analysis. For instance, you might see that there are some costs that can be avoided, delayed, or negotiated. For instance, can you:

  • Cut any expenses?
  • Negotiate any existing lines of credit?
  • Defer any payments?
  • Negotiate payment terms with your vendors, or defer payments?
  • Accelerate payments from customers?
  • Restructure employee compensation?
  • Outsource some functions to lower costs?
  • Sell some non-productive assets?

 

Learn more

Insero & Co. is a public accounting firm with decades of experience working with both small and large businesses, as well as nonprofits. Our experts provide customized consulting services to meet your current and future needs, including serving as an extension of our clients’ accounting departments and filling positions to meet immediate shortages.