Cash flow tips for businesses impacted by COVID-19
With limited budgets, cash flow issues are usually one of the more pressing challenges small and medium-sized businesses (SMBs) face. A healthy cash flow means that businesses can pay their employees and suppliers on time, while meeting overhead costs.
For many businesses, ensuring that there’s more money coming in (accounts receivable) versus money going out (accounts payable) is a tricky balancing act. Cash flow problems have been further exacerbated by the ongoing COVID-19 pandemic, with nearly two-thirds of businesses seeing their revenue plunge by 31% on average in Singapore.
How can businesses ensure that their finances are managed properly, especially in current difficult times?
Create and manage a cash flow forecast
A cash flow forecast is essential for a business to make clear decisions, as well as forecast their expenses and revenue over a prolonged period, preferably of at least six to twelve months.
The forecast should include predictions for increases in the price of raw materials and list all expenses, such as wages, rental, supplier costs, insurance and assets purchased. A good forecast should also map out the peaks and troughs of consumer demand so that the business can plan their resources accordingly.
Stay on top of inventory management
Performing inventory management, especially with the help of cloud-based software that provides real-time data, is essential for a business to meet its customer needs and gain oversight of stock movement. It can help make the process of topping up and receiving stock more efficient and minimise delays.
A good inventory system allows a business’s storage space to be freed up faster, improving opportunities to maximise income potential. It also means the business doesn’t have to pay for unnecessary storage.
Utilise government grants
A businesses that’s been impacted by COVID-19 can approach its banking and accountancy partners for help in applying for cash flow support grants offered by the government. In Singapore, such grants have helped SMBs achieve a 40% decline in cash flow problems
Reviewing expenditure statements
To stay on top of cash flow, SMBs should constantly check the status of their invoices and review their income-expenditure reports. Modern accounting software can help them do this efficiently. It can also give them an overview of all their cash flow projections and financial statements for better long-term visibility and bill management.
How can Access accounting solutions help your small business?
Is your business interested in making the transition from manual accounting processes to automated software? Discover how you can choose the right accounting software with Access.
