How to Effectively Manage Cash Flow During a Crisis
Immediate Solutions for Cash Flow Problems in Times of Crisis
Understanding how to manage your independent insurance agency‘s cash flow is essential to its success. However, in times of crisis, proper cash flow management is not necessarily an easy task.
Due to 2020’s public health situation, an economic crisis has hit every country around the world. Most businesses are struggling in different ways and having cash readily available for any rising need is always a concern.
There is no doubt that cash flow management is especially crucial for small businesses. Recently, we went over some essential tips to help you improve your cash flow. Today we want to share some more detailed recommendations that can help you quickly solve your cash flow problems in times of crisis.
Pay the Bills by Their Expiration Date
Bills have expiration dates, and while you don’t want to submit your payment late, you also aren’t obligated to pay early. Holding on to your accounts payable for a little longer will allow you to keep more cash in the bank, which can be a viable solution when you’re having cash flow problems. Be sure to talk to your vendors to let them know if you need to take this approach until you find your balance again. This will help you prevent damage to your relationship with your vendors.
Minimize Inventory Purchases
Keep your inventory purchases to a minimum. Buying only what you need and doing it only when necessary will help you free up some cash.
Negotiate Lower Prices
There may be areas where you won’t negotiate prices, but you may ask for discounts on others. Go over your list of vendors and identify those who you pay the most. Negotiating lower prices in exchange for longer-term agreements may be an option that can save you some money.
Draw Down Current Lines of Credit
This is more of a long-term solution, but it can be beneficial for your business, especially when going through a rough patch. If you currently have a credit line, drawing it down could help you keep some cash handy to handle unexpected situations.