As cities start to re-open and people return to work, small businesses are looking to re-open following COVID-19 and the new social distancing guidelines. However, it is not as simple as just putting a sign on the door that says “open.” The new public health guidelines present business owners with challenges as they re-open. Business owners face new restrictions on capacity and services, but this new normal will lead businesses to focus on their cash flow problems and how to overcome them.
Businesses can consider many solutions and strategies as they start to re-open, which will help them free up their cash flow and prepare for the future. Regardless of your financing situation, whether you’re starting a business or re-opening an old one, these tips will help you with cash flow management and accessing your working capital.
Widen your inventory and expand your services
Small businesses are forced to think of new ways to expand their services to keep businesses open. With all restrictions that come with COVID-19, it is down to the widening of inventories and the expansion of services to maintain positive cash flow. Some ways businesses are trying to improve their cash flow statements is through improving how their company operates, like delivery or contactless shopping. Other expansions are through virtual services and consultations, video calling and conferencing, and transitioning all services online if they can.
Many businesses are also looking to see how they can widen their inventory during these times. Retail companies provide products like hand sanitizer or face coverings as they are in-demand right now for their customers. Businesses can also offer discounts, gift cards, and subscriptions to keep cash on hand and improve financial statements as best they can. Adding products that are in-demand right now is a crucial function to stay on top of cash flow.
Renegotiate terms with suppliers
The COVID-19 pandemic hasn’t only put a damper on small business sales. Suppliers are also struggling in the current economy, with so many customers going out of business or decreasing their purchase amounts. Since nothing is certain, it is good to speak with your vendors to renegotiate contract terms. Vendors may be willing to lower inventory prices or extend your contracts at a lower cost to ensure they still have cash flow coming in in the upcoming months. It is important to know that you are working with flexible vendors at a time like this, so you can keep your business’s doors open.
Make a financial plan
The current times and state of the economy are uncertain, at best, right now. Businesses may be opening today and closing tomorrow. That is the present state everyone is living in and having to adapt to. So, it is essential that your business has a financial plan in place for backup and success. Some companies qualify for small business loans, but not everyone can get one, and many are running low on funds.
Getting a line of credit from a bank right now can be hard and time-consuming. One way to ensure that you have consistent cash flow without waiting a long period to get approved is through accounts receivable financing. Also known as invoice factoring or invoice financing, this will provide you with instant access to your working capital to stay on top of all operating expenses. Freeing up your working capital allows you to pay your employees, stay on top of your inventory, or simply keep your doors open.
These tips can help make significant changes to your business when the economy starts to re-open. However, they are not only good for your business now. They will also be beneficial for business practices in the future too. Owning your business structure, improving your inventory and services, and taking control of your finances will set your business up for success for whatever challenges the economy may bring.
For more information on how Porter Capital can help you access your cash flow as you re-open or grow your business, contact us today!