Running a business means being well-versed in the art of problem-solving and planning. With the coronavirus pandemic wreaking havoc on the economy, the way we do business is transforming almost daily.
In such times of crisis, it can be rather difficult to remain calm and think optimistically. Business owners have no choice but to stay calm under pressure and look ahead. After all, this is part of their role. As a small business owner, you will be forced to make drastic moves to survive. As you get your business into survival mode, keep the following in mind:
The secret to surviving a down economy is cash flow.
A focus on cash flow management is mandatory to prosper during the economic recovery. Your business model may change as you either downsize, pivot, and even, prosper through the coronavirus pandemic. Knowing your cash position, your access to capital and the reliability of revenue is crucial when deciding to lay-off or hold out with help from a PPP loan. A cash position represents the amount of cash that a company, investment fund, or bank has on its books at a specific point in time. The cash position is a sign of financial strength and liquidity.
Why cash flow is so important
Lack of cash is one of the biggest reasons small businesses fail. Focus on your inflows and outflows of cash will empower your small business to move forward during this turbulent time.
Dealing with cash flow issues is most difficult when the economy is going through a recession. You have many expenses and money is going out fast. And you may have slower business or customers who aren’t paying you. You will need some other sources of cash, like through factoring or accounts receivable financing.
Factoring can often be a huge help for small business owners as it can free up cash which would otherwise be tied up in unpaid invoices. Many businesses also turn to factoring their invoices because they cannot qualify for a traditional line of credit at their local bank. There are many reasons a small business may experience a turn down with their local bank; start up business, poor personal credit, customer concentrations, lack of collateral, balance sheet issues. The good news is that most of those situations are not a problem for a good invoice factoring company.
Be ready to grow with the economy post coronavirus
Just like the response to COVID-19 has varied by country or state, the reopening of the global economy is expected to be gradual and uneven country-to-country, state-by-state. With a clear understanding of your business’s cash flow you can adjust to be where you want to be in a month, two quarters or a year from now.
Through the purchase and management of Accounts Receivable (invoices), Third Coast Commercial Capital, Inc. is able to help companies take advantage of new business opportunities and continue to grow and be successful.
Whether we can get back to work in a matter of weeks or another two or three months, careful management of cash flows and attention to liquidity will see your business through this crisis. Third Coast Commercial Capital, Inc. can help with turning invoices to cash through factoring. If you are a business owner in need of working capital please contact us today!