There aren’t many businesses in Australia which haven’t been impacted in some way by the COVID-19 outbreak.
If you’re concerned about what’s on the horizon for your business, here are some ways to stay in control of your finances and get through the economic downturn.
#1 Stay on top of invoicing and debtor management
When things are going well, it doesn’t feel so dramatic if a client is late with a payment. In 2020, the situation is very different.
You are a business, not a bank. If clients owe you money, remind them to pay. They shouldn’t be using you as a source of credit, which is essentially what they are doing if they go past their payment terms.
Of course, some of your clients may have found themselves facing financial difficulties. In these circumstances, reach out to them to figure out a way forward. They may appreciate payment terms which gives them a little more time.
If you are in the habit of invoicing once a job is complete, this is a good opportunity to restructure your billing. Request a deposit at the very least before you start work as part of your terms and be very clear upfront on what your expectations are in terms of payment timelines. You do not want to be the business that goes under because your clients owe you money.
#2 Review your expenses
Unfortunately, you need to be ruthless with your spending if you want to stay afloat right now.
If you haven’t done so already, now is the time to review your expenses and make budget cuts where possible.
Some companies are taking drastic steps by requesting employees to take temporary pay cuts. For others, it’s a matter of looking at every outgoing cost and reviewing where things can be but back.
Your accountant or CFO can help you make the decisions around where to cut back.
#3 Talk to your suppliers
Just as you need to have discussions with your clients, you may also need to talk to your suppliers.
With so many of us in the same boat in terms of money, the best approach is to work together to figure out ways to move forward. Reach out to your suppliers straight away to discuss your options for deferred payments, payment plans or reduced costs.
Keeping a dialogue open and being honest is important. Let them know you want to pay and fully intend to, then stick to the revised payment terms as much as possible.
Again, your accountant or CFO can help. There may be assets you can sell for a discounted price in order to keep paying your suppliers.
#4 Make a financial plan
There has never been a better time to get in the habit of sticking with your budget and doing some forecasting for the future.
The businesses which survive the difficult times are the ones which look at what has happened in the past, understand their present status and plan for what’s around the corner.
No matter where you’re at right now, putting together a forecast can help you navigate what’s coming next. It will also help you get crystal clear on the exact figures your business needs in order to operate every month.
#5 Secure financial assistance
As this crisis has unfolded, we have seen the Australian Government take drastic steps to support business owners and their staff.
Even if you have been forced to close, you still have the option to support your staff through the JobKeeper payment. There are also grants and allowances to help you stay on top of your bills if your income has been dramatically impacted due to the COVID-19 outbreak.
There are a lot of options and they are changing regularly so reach out to your accountant to see what’s possible and how to lodge a claim.
#6 Prepare for the rebound
Many businesses are calling this period ‘hibernation’ rather than ‘shutdown’. We can all take hope in the understanding that we will be able to resume our lives at some stage.
The quiet period finally gives you time as a business owner to take stock and put measures in place for a more robust operation. This may mean creating systems and training documents for your staff, working on a marketing plan or putting smarter policies in place which result in better quality customer service.
You can also investigate the right technology to improve efficiency and productivity, or look at diversifying so it has more income-generating options in the future.
Ideally, this period has provided you with the opportunity to review your finances, make a forecast and restructure things so your business is well prepared to survive any challenge.
Need advice to get your business through the COVID-19 crisis? Contact CBQ Financial today.
READ MORE: Financial dashboarding to stay afloat in a COVID economy