As a business owner, you know that cash flow management can sometimes be a challenge, no matter the state of the economy. During a time of crisis, however, good cash flow management becomes crucial. 

Regardless of whether you are in the retail, manufacturing, service or tech industry, the COVID-19 outbreak has the potential to alter your ability to obtain affordable financing. It may also put you in a cash crunch that can send you spiraling toward trouble if you're not careful.

Here are some tips to keep in mind when managing your cash flow during the COVID-19 pandemic:

Take Advantage of Loan Programs

First and foremost, if you haven't already, consider applying for an SBA Paycheck Protection Program (PPP) loan. These forgivable loans are focused on helping small businesses retain their employees and cover payroll, mortgage interest, rent and utility expenses. Make sure to read all rules and guidelines carefully to see if you qualify, and to ensure your loan is forgiven. The SBA is also offering some additional programs to those who are eligible. Visit or contact your business banker for further guidance on these programs. Paycheck Protection Program funding is still available as of this writing, but that is subject to change at any time. 

Identify What Expenses NOT to Cut 

There are some costs you shouldn't cut and some that you just plain can't. Unless you already made previous arrangements, you can't stop paying the rent or mortgage, and you'll need to keep up any insurance payments. You also want to keep employees on the payroll. Your staff is your most valuable asset, and while cutting staff during slow times seems like a quick short-term solution, laying off workers can be costly to you in the long run. When the economy begins to recover, you will incur unplanned expenses for recruitment and training when it's time to hire additional staff. Additionally, you'll need to prove that you keep employees on the payroll to qualify for loan forgiveness under the Paycheck Protection Program. 

Determine What Expenses CAN be Cut

As we mentioned, your rent/mortgage is a fixed expense. However, if you are creative, there is leeway to save money. 

  • If your lease allows, you could consider subletting space. If you are transitioning to allow more of your staff to continue to work remotely, even after the virus threat has lifted, you may be able to sublet some of your space to another business.
  • Find ways to reduce your utility bills. Make sure unused office equipment and appliances are powered off. Turn off lights in areas that are currently going unused. If you own restaurant that is doing take-out only, there is no need to have lights on in the entire restaurant. Additionally, adjusting the thermostat by just a few degrees can mean noticeable savings on your bill.
  • Cancel unused subscriptions and memberships. Review any subscription services annually and only renew the ones you really use. Don't automatically renew. 
  • Cut travel costs, even as the pandemic winds down. This downtime has shown us how easy it is to meet via Zoom, Skype and other online options. While face to face contact is vital in business and will never be completely eliminated, more thoughtful consideration of business travel could be beneficial for reasons besides the cost savings. 

Update Billing and Collection Policies

Getting paid for services as quickly as possible is a simple way to improve cash flow. Instead of continuing Net 30 Invoicing Terms, request to be paid at the time of service or purchase. If you're not seeing customers face to face, offer remote or online payment options. If you do need to invoice, send it by email and provide a quick and easy payment option.

Update your payment policy to ensure you collect it as soon as possible. Even in this uncertain time, you could offer a small discount for paying upon receipt. The faster you get the payment, the better your cash position.

Be sure to follow up on any unpaid invoices promptly. Don't let them sit, with the hope that they'll be paid - become proactive. Follow up within a designated period with an email reminder or a telephone call.If you've been in business a while, you remember the Great Recession from over a decade ago. You weathered that storm, and because business owners are a resilient bunch, you'll endure this one, too. Don't hesitate to reach out to your business banker or treasury management specialist with questions or for advice. We're here to help, and we will get through this together!

Written by Anne Denissen

Anne Denissen is Vice President - Treasury Management at Investors Community Bank. She holds a Bachelor of Arts degree in computer science from Lakeland College and has more than 20 years of banking experience. She helps guide each business to solutions that fit their needs, and coordinates the implementation of treasury management services.

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