Procurement 101How to Keep Up With Finances During a Pandemic
As the rippling effects of COVID-19 spread across the globe, businesses of all kinds have been experiencing a heightened level of uncertainty and stress, and are ultimately struggling to survive.
In response to the current pandemic, a large majority of businesses have been forced to layoff employees, drastically change their processes, and many have closed their doors. We asked ten experts for their advice on how businesses should handle their finances when faced with a pandemic such as the recent coronavirus and this is what they said:
Complete a full review of your operating expenses
“Companies that are being impacted should conduct a full review of their operating expenses. We did our own review of our costs (fixed and variable costs) to see where we could cut back or shift around costs.
“We looked at canceling completely or reducing our advertising costs to better align it with our new forecasted revenue. Fixed costs such as insurance, bank debt and even bills we were able to contact the companies and work out a deferral payment between 1 to 3 months. I even know of some businesses that were actually allowed to cancel and change their insurance without penalties.
“And finally, we looked into employee wages subsidies supplied by the government, so that we could keep paying our staff their wages.
“Overall, the results were great, we found that all companies/vendors were very understanding and happy to assist with our requests. Plus, government subsidies were a huge help to keep our staff employed.”
– Ian B., President of Kredmo Pty Ltd.
Don’t be afraid to ask for help and prepare for the worst
“This is a really uncertain time, so there are plenty of people who will feel lost and confused, especially when it comes to the finances of their business. Firstly, you have to remember to get help if you need it. If you have had to close or pay sick pay to staff, you will be able to get some support. Make sure to have a plan in place for how things are going, alongside a budget, and then have something for if things get worse. If you prepare for the worst, you will be ready for anything.”
Cut all non-essential costs and increase communication
“Cut all nonessential costs now. It’s time to invigorate your entrepreneurial hustle and bootstrap. The second priority is constant, clear, honest communication with your team. In the ever-changing COVID-19 landscape, this could not be more important. Start by having weekly 1:1s with key employees, and bi-weekly all-hands meetings. Adjust as needed. Do not avoid risks, instead, state them and address them. Your team members are smart and they will know what you’re not saying. If you have investors, the same rule of honesty applies to them!”
– Casey Grage, CEO of Hubly Surgical
Speak to the bank as soon as possible
“Don’t delay speaking to the bank. Nobody can see into the future, but you can generally see a particularly lean patch coming, and make projections for what kind of financial shortfall you will face. It’s wise to speak to the bank before you begin to breach limits or miss payments, as they’ll likely be able to do far more to help you while you still have an unblemished record. Be honest too, because there’s little point in only asking for half the help you need and then having to go back shortly afterwards.”
– Ben Taylor, Founder of Home Working Club
List all possible financial impacts the pandemic may have on your business
“I am fully aware of the importance of keeping track of your finances as a business owner. I am trying to be on top of things, especially nowadays in a global crisis. My best tip here is to list all the possible financial impacts that this pandemic may have on your business. It could be with your sales, your supplies/inventory, or your staff. As much as possible, keep all bases covered and be sure you know where every cent is going.”
– Matt Scott, Owner of Baltimore Pest Pros
Speak to your lenders
“Lenders are becoming more flexible during this pandemic and the associated economic crisis.
Your lenders, including business credit cards and your business lines of credit, might be able to work with you if you are impacted by shutdowns or a significant loss of revenue. We’re seeing some lenders offering to waive late payment fees or even agree to not report negative marks to your credit report. While some lenders are starting to publish what they can do to help, many are simply evaluating on a case-by-case basis, so you’ll need to contact your bank or card issuer to see what they can do to help.”
– Greg Mahnken, Credit Industry Analyst at Credit Card Insider
Leverage digital tools available to manage your expenses and conduct business
“Figure out how to cut back your business ongoing expenses. Fortunately, there are various software and apps that businesses can use to manage and track their expenses. Track your expenses and identify ones that you can eliminate.
“Try to keep your cash flow positive. Leverage the latest technology such as cash flow forecasting and management software, invoice as early as possible, keep payment term short and simple, delay your payable, consider adequate SBA Cares Act loan to solve your cash flow crisis.
“Offer your products and goods online. Whether it’s a restaurant, book shop, coaching institute, businesses can adapt and use digital tools to continue to serve their customers. If businesses are sending tangible items, they win their customers’ trust by sharing policies and processes you’re following to keep them safe as they engage in business with you. Depending on your type of business, there might be other ways you can continue to offer services online. For example, a gym or yoga center can contribute to offer personal training or coaching using video conference software.”
– Nick Chandi, Founder and CEO of PayPie
Provide your clients with just-in-time education
“Businesses should provide just-in-time education, as it relates to its industry, on how its clients can manage the pandemic thus creating a new stream of revenue. For example, Southern Tax pivoted its focus from providing education through the sale of our services to simply making education readily available to our audience in a 100% online format through our social media platforms and online communities, email campaigns, and live video conferencing. Pivoting our focus caused our company’s visibility and social proof to increase; our social media likes, follows, reposts, and requests to join our online community are increasing by the day. We are establishing ourselves as an authority in the accounting/finance industry, and our audience’s desire to establish and maintain a stable financial structure has also increased. The increase in revenue from client referrals to purchase services that assist in creating a stable financial foundation is an obvious indication that our decision to pivot our focus towards education primarily was a step in the right direction for our company as our net income for the past month has doubled compared to last year’s net income for the same time period.”
– Jasmine Young, Founder & CEO of Southern Tax Preparation & Services, LLC
Reduce expenses by 30%
“Being an online coupon providing platform that runs mainly through computers, we are still fully operational from our homes. We’ve stopped paying the transport allowance to our employees because everyone is currently working from home. We’re not taking the extra perks which were used to be added with our monthly paychecks. The decisions to temporarily reduce the salaries have been taken with the full accordance of our employees. We are committed to paying our employees every single unpaid penny whenever the situation comes to normal. Moreover, since our office is closed down, our office maintenance cost has come down to nearly 20%. We’ve been able to reduce the total monthly expenses of our business by approximately 30%. In this present situation, this monthly savings will hopefully help us to remain fully operational even in the possible post-pandemic recession.”
– Andrei Vasilescu, CEO and Digital Marketing Expert at DontPayFull
Manage cash flow efficiently
“Managing your cash flow efficiently ensures you pay employees and suppliers on time. According to a recent survey, cash flow is a problem for nearly three out of five small business owners. Thus, you should include cash flow forecasting.
“The following are some points that you should consider to ensure better cash flow management: Review and adjust cash flow budget, review capital expenditure, assess financing options, timely financial reporting, cutting overheads, inventory management.”
– Stacey Howard, Accounting Expert at Cogneesol
With the massive waves of uncertainty that the current environment of COVID-19 brings, it’s crucial for businesses to have enhanced spend visibility and cost control. If you’re struggling to manage your expenses, invoices, purchase orders, or otherwise, reach out to our team at Tradogram. Our solutions can offer you the ability to enhance team collaboration, oversee purchasing activities, and automatically generate reports from stored transaction histories – all on one platform. Let us help your business come out of this pandemic stronger than ever before.
Subscribe to have new content delivered directly to your inbox.