The COVID-19 pandemic has thrust communities around the world into unprecedented conditions. It has ushered in a lot of uncertainty, especially for the business owners. Both small and large organisations have suffered in their own way and many had to pull down their shutters due to loss of revenue. In such situations, it's quite challenging for businesses to stay afloat and maintain a stable liquidity status.

The entire COVID-19 episode brings clear lessons for businesses that contingencies can come about at any time. Sometimes, the most unexpected thing can shake up your entire business. Take, for example, a customer or a vendor files a suit against you because of some negligence on your part while conducting business. This can prove extremely expensive because you will have to bear high legal fees for defending yourself.

However, having public liability insurance in place can prove quite useful during such times. Such insurance can cover your legal expenses and provide the much-needed financial relief during a contingency. If you wish to know more about public liability insurance, then click here.

COVID-19 has presented a wave of monetary challenges for businesses all around the globe. When you are struggling to survive in a pandemic situation, you will have to take care of your cash flow. For that, you can follow the tips below:

Go online

Believe it or not, the online space has become all busier during the pandemic. Many businesses had to start operating online following the stay-at-home orders that led to the temporary closure of brick-and-mortar stores. They have resorted to offering online services or promoting online purchases to make life more convenient for consumers and keep their cash flow intact.

Many brick-and-mortar businesses have started marketing e-gift cards during the pandemic. Such a marketing initiative has proven a low-effort, low-cost way of maintaining cash flow during the lockdown. It eliminates the need to invest in raw materials and supplies to come up with an actual product or service.

Look at your costs

Now that your revenue has reduced due to the pandemic, you need to look at your costs. Incurring more expenses than getting more income would prove unsustainable for your business during these tough times. This is the time when you have to take a close look at your fixed and variable costs and try to reduce them as much as possible.

More often than not it’s easier to slash variable costs, such as holiday packages, lunch coupons and other changing costs than fixed costs, such as salaries, office rent, utility, insurance and equipment. You need to look at cheaper ways to ship products or incentivise your teams. You also need to look for ways to turn your fixed costs into variable costs. Maybe you can go all-virtual by investing a collaborative tool and save on office rent.

Check your supply chain management

For businesses, it's always been a challenge to keep close tabs on their supply chains. During the pandemic, it has become all the more important for businesses to focus on this aspect. There may arise many money-related issues when it comes to managing supply chains. This is especially true if your regular buyers are not able to pay for their purchases because of their liquidity crunch.

If you are selling your product or offering your service beyond national borders, you are generally supposed to get a letter of credit signed by a bank, proving that the buyer can make the payment. This document can secure your inventory in-transit and guarantees the final payment. Make sure you analyse key financial risks involved in dealing with your customers, vendors and trading partners during the pandemic so that you are better prepared for the future.

Know your routine cash transactions

Last but not least, you need to focus on specific routine cash flow management tasks and streamline them for better efficiency. The cash-to-cash conversion cycle has become more critical for businesses during the pandemic because that's what will ensure that there's enough liquid cash for other contingencies.

Routine back-office cash-related functions, such as paying bills and payables and collecting receivables, are often underestimated on a normal business day. However, during the pandemic, the spotlight has shifted to the balance sheet from the income statement. It's high time for business to manage their working capital by addressing inventory, payable and receivables with equal importance.

The above are some of the many tips to manage your cash flow effectively during the COVID-19 crisis. Do follow them to sail through these tough times.


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