Let’s look at cash flow management and accounting in Covid-19 times.
Create a short-term business plan
Your first area of concern is to make sure that you keep revenue coming in so you can pay your bills. This means you must come up with a short-term business plan. Identify items you can sell online, deliver to customers, or sell via curbside pickup. You should also review your income and expenses, and cut out everything that isn’t necessary to maintain your ability to deliver products and services. You could reduce or cancel premium services if you can’t afford to keep them up, for example. The main goal here is to bring expenses down to at least match income.
Be strategic in your cuts
Some changes may be mandatory, and you’ll have to be able to adapt. You may not be allowed to perform certain non-essential services, for example. However, you might keep customers happy by scheduling service when your area is likely to re-open, or give them discounts on essential items and services so that you keep a loyal customer and continue to generate revenue.
Another thing you need to do is take stock of your entire supply chain and see if you can switch to lower-cost suppliers. This might be a temporary way to reduce costs, but it could also be a permanent revenue enhancer. You should also review your marketing strategies and business relationships. If the return on the investment was below expectations, this could be a great time to just end it.
Don’t forget to look at capital expenditures and ongoing expenses you may have assumed were constant. You might want to switch software vendors, for example. Piesync.com has a great piece comparing Quickbooks and Wave. In addition to talking about features one offers over the other, it also showcases the difference you would see in licensing and usage fees. They explain how much you’d pay if you used Wave to do payroll or have access to their premium customer support, for example.
Make the most of your reports
Another thing you should do is use reports to stay on top of inventory management. Use a first in, first out approach, especially with perishable or seasonal items. If you can’t sell it, find ways to donate it and get good PR instead of throwing it out.
And don’t waste money buying items that are hardly selling during the crisis. Pay attention to what is selling and ensure that you don’t run out. You should also consider switching to reports with real-time analytics so you can immediately order more if sales of a particular product spike.
Cash flow is a problem for roughly 60% of small business owners, and the importance of cash flow management only increases during times of uncertainty and volatility. Master this, and you’ll be positioned to profit when life returns to normal.