Navigating 2023 Business Conditions

Jessica Madison
May 7, 2023
CashPhlow Weekly Forecasting

What to do now?

The old saying, “cash is king”, is more important now than ever before. It’s safe to say a majority of businesses today are in a cash crunch.  Sales have dropped, bills have piled up, and the future is uncertain.  

What should you be doing?  First know that everyone is in the same boat.  Everyone.  Below are suggestions to navigate.

Talk to your bank. Be honest. Remember everyone is in the same boat.  All businesses have been impacted in some way with this pandemic. Your bank wants your business to succeed. Think about it, their business would not exist without yours. You are the bank’s customer.  What is the bank looking for? Honesty, action, and a forecast.  Honesty and action work together here.  What are you doing to adjust the business and manage cash? (We will cover actions below.) Action - The bank needs to see that you have adjusted your business to realistic levels. Again be honest with sharing what you are doing. Forecast- the bank will want to see a weekly cash forecast. Monthly forecasts are not detailed enough for the bank. They want to see the inflows and outflows of cash, which documents the Actions you are taking in the short term.

Reduce expenses. First review employees. If you have not, review and make adjustments. Also consider temporary salary reductions. But, keep in mind the tight labor markets will be back. Key people will be needed for your business.

Next review all expenses. Vendor by vendor.  Review current bills and future or expected bills. Do not go dark. Call your vendors and request payment plans and deferred payments.  Defer cash payments! Remember everyone is in the same boat!  Your vendors are struggling too. And take the long term approach.  Vendors are partners.  You both need each other over the long term.

Sales pivot. What can you do to accelerate sales?  Offer deferred payments to close business. Develop a new sales channel?  Adjust or change your product mix?  Call customers to understand how they have been impacted. Can they make full or partial payments?  Consider discounts to motivate payment timing.  Check in often without overwhelming your customers. Your understanding and patience will put you at the top of their list. Some of these solutions may be short term, but be careful not to disrupt long term plans.

Plan cash! Forecast cash.  Every week for the next 12 weeks.  Make it part of your routine to forecast cash every FRIDAY. Why Friday? So you have a plan for the next week ahead.  What bills must be paid?  Payroll to cover? Customer payments to call and confirm?  Future cash shortfalls?  Communicate and share with the bank.  How can the bank help, if they do not have visibility? Make Fridays cash forecast day.

The last word. Remain positive.  The world is different now, but the economy will be back.  When is the only question.  Manage cash and be there for the “when”.  

We are here to help.  Send us a note and we will do our best to answer cash flow questions.

Happy Cashphlowing!

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