Three Keys to Managing Your Cash Flow in a Crisis

3 Keys to Managing Your Cash Flow in a Crisis

1) Create a Cash Forecast - During a crisis, cash is king and it's crucial to preserve cash. To do so effectively, it's necessary to have the right tool - the cash forecast. Know the starting point of your cash balance. Work with your accounts receivable/accounts payable staff to lay out the timing of cash inflows and outflows. Put them in a simple spreadsheet to create a cash forecast which will provide you with a good sense of your daily or weekly cash flow.

2) Constantly Communicate with Stakeholders - Effectively managing your working capital means eliminating non-essential costs, deferring payments and accelerating cash receipts. Since this global crisis has impacted all businesses in some way, it's important to openly communicate with vendors, customers and lenders to negotiate, manage everyone's expectations as well as the timing of your cash flow.

3) Get Creative & Re-evaluate Your Business Model - Managing your cash flow in a crisis requires creativity. Use the crisis as a time to creatively pivot to new revenue streams to bolster your cash flow. Continually assess what business adjustments work well and what new ideas should be implemented. Finally, take the time to strategically evaluate the direction of your business and what you want it to look like when you're out of the crisis.

These points are helpful in keeping the business afloat until the crisis subsides.


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