Coronavirus 12 - How do I preserve my cash?
So it has now been two months since our world changed. We would like to think that our lives will return to normal and that business will return to pre-virus levels. There does appear to be some evidence that this will happen, but we know it will take time.
Unfortunately, we are already technically in recession. Recession isn’t a lack of money (there is now more money in the economy than ever before), it is the lack of money flow - the rate and speed that money is spent.
The inevitable result is that cash becomes precious. Cash is the lifeblood of every business - without it you can't survive.
Here is a list of tactics that you may experience or wish to employ to preserve your cash - obviously many of them are very dubious and negatively impact other business, so I can't condone them.
Use past relationship/trust Swap assets for cash Keep communication going Have a good gatekeeper Pay by cheque Increase terms – 30-60/60-90 days Discuss pipeline future business Blame a new accounting system Issue contra charges Claim Jury service Require two signatures/authorisation Use invoice debt Say you're on holiday Pay invoices out of order - it really confuses accounts Invoice queries – eg. quality, breakdown Say the invoice has gone missing Pay a bit at a time Use factoring Come to agreement with the state – HMRC, VAT All of the above are ultimately just stalling tactics. There are only three things that you can do to really save money:
Make it more efficient Make it more effective Stop doing it Here is an example of an exercise that you can carry out:
What could you put in place and do?