The economy has undergone some violent shifts this month, as the world attempts to figure out Coronavirus and stop the spread. Many businesses are struggling with shutdowns or slowdowns, and smaller companies will be hit hardest. Here are some ideas for surviving these turbulent times.
-Review all monthly spending with a fine-tooth comb. Cut out the wasteful or unnecessary ones immediately.
-Look at your monthly rent. Contact your property management/landlord and ask for a decrease in rent. Offer the possibility of extending the lease in exchange, so the deal is advantageous for both parties. They would prefer that space is occupied with income versus being vacant.
-Contact ALL your vendors. Just like your landlord, they would prefer to keep the business to protect their revenue stream, so they may be willing to reduce your rates, waive transactions, etc. The worst thing they can say is no. If that happens, consider if it’s cost-effective to look for a new vendor. If not, move on to the next on the list. There’s no harm in asking, and if you don’t, you can guarantee they will not volunteer to reduce costs. Also, consider asking for payment terms to be extended, such as moving 30 days to 45 days. Doing so may be crucial in your company’s survival.
-Reach out to your existing customers immediately. Remind them why they chose you in the first place. Highlight your advantages over your competitors. Call them, email them, send cards thanking them for their business.
-Look for other lines of business that can bring in more revenue. Present these to your already existing clients; after all, your company already has its foot in the door.
-Inform your employees about the situation. Applying an all “hands on deck” approach will empower your employees to feel as they are also a part of the solution, and they are! Before cutting salaries, consider cutting hours if your business model can endure the cut.
-Most importantly, increase your potential to get cash flow sooner. Are you sending statements consistently? Do you have a team following up on your accounts receivable to ensure that your clients — also struggling with this declining economy — are treating you as a priority over other creditors they may owe?
-Consider outsourcing your accounts receivables. It’s proven that outsourcing your business office is more advantageous cost-wise than employing in-house personnel. Also, in outsourcing, you receive the benefits of their innovations in reaching your customer base — many of which you may have not previously tried.
-If you use a collection agency, send the accounts earlier. You want to get ahead of the other creditors that they owe. Consider submitting to “soft collections” or “early out” collections at 90 days instead of 120 days or higher. Studies show the recovery rate of accounts receivable decreases exponentially the more it ages.
What changes are you making to adjust your business during these times? If you need help with accounts receiveable, contact us to get started.