Small businesses are particularly vulnerable during periods of economic hardship.
When sales are slow, the ongoing financial obligations, such as overheads and payroll, remain pressing. Effective pre-planning and a proactive approach are key to navigating economic downturns and ensuring continued success.
It is essential to have a comprehensive understanding of your payroll commitments, as well as any anticipated expenses that need to be managed.
If there is any likelihood of a shortfall, it is critical to address the situation promptly. This may involve negotiating revised payment terms with suppliers or creditors or reassessing other business expenditures. A clear strategy must be in place to ensure that neither the business nor its employees are adversely affected.
Managing Cash Flow
- Invoice promptly: Issue invoices as early as possible and consider advancing them where appropriate. Explore options such as offering regular client’s retainers or similar arrangements for pre-payment of services or products.
- Chase outstanding payments: Take this opportunity to follow up on any overdue invoices. Maintaining strong communication and relationships with clients is crucial to securing timely payments.
- Communicate with suppliers: Open and honest discussions with suppliers can often result in favourable terms. In many cases, a supplier would prefer to offer flexible payment options to sustain an ongoing business relationship.
- Review inventory: Assess your inventory and consider whether alternative, locally sourced suppliers could reduce costs, particularly by eliminating shipping fees, or whether other product alternatives could lower overall expenses.
- Examine your costs: It is prudent to regularly review all business costs, as they can gradually increase unnoticed. Regardless of the financial situation, taking time to scrutinise regular payments, subscriptions, and future expenditures is important. This review can help identify areas—such as travel, events, or procurement—where cost-saving alternatives may be found.
- Consult with financial institutions or tax authorities: If cash flow becomes tight, it is essential to engage in early discussions with your bank or tax department to arrange the necessary support and ensure you are prepared to manage through the period.
We are here to assist you in implementing effective strategies that will protect your business in the long term and alleviate cash flow concerns.
