It has been nearly six months since the Coronavirus outbreak forced countrywide shutdowns and disrupted the economy in the worst possible way in living memory. The situation has resulted in high volatility in the markets, with many businesses facing an existential crisis as their liquidity has dried up. The post-pandemic world will be full of uncertainties, but it will also be full of opportunities. To conserve. To diversify. To sustain. And more importantly, to thrive.
As the saying goes, every cloud has a silver lining. Black swan events, such as this, come once in a while, and it is a serious test to an organization's leadership. But through them all, we have seen victors rise. Be it the Great Depression or the Oil Embargo or even the Recession of 2008, resilient businesses with long-term sustainability plans are the ones that best weathered those storms.
By now, most organizations must have got some urgent and critical tasks such as employee safety, operational continuity, regulatory compliance, etc. out of the way. Now is the time to pay attention to the company's financial health, and more importantly, its cash and liquidity status.
To begin with, organizations, especially small businesses, should outsource their accounts to a professional accounting firm. The current situation demands that the focus be on conserving cash more than the P&L. As a stakeholder of the business, it can, sometimes, become difficult to look beyond the P&L. That is where the experts weigh in.
A professional accounting firm with cash flow management expertise will stress-test your company's liquidity and cash flow position for a variety of challenging scenarios. It will also lead to a seamless reprioritization of the sources of capital, budget, and forecast of your business. The 'outsider' perspective that a professional accounting firm can bring in is invaluable at a time like this.
Urgency is particularly essential in tight times. One of the first things to put in place is spending cuts. In other words, put in place clear and precise processes to access spending. Implement tactical measures such as only essential hiring, pausing big marketing and branding pushes, and reprioritizing of resources.
Another point of consideration is to not depend on the same sources of capital you previously did. Using a professional accounting firm's forecast planning services, evaluate how much cash your business needs for a particular period. Engage with your current as well as new and prospective investors to ensure this credit flow remains open.
In a situation like this, yours is not the only business facing tough times. Financial forecasting and supply chain management are closely tied, and even more interdependent in times of crisis.
One of the earliest priorities in building a sustainable cash flow is to evaluate your suppliers', customers', and key trading partners' ability to be able to pump cash into your supply cycle.
One of the pandemic's biggest revelations has been the extent to which technology has made life simpler for businesses. Remote work, online classes, AI-based tracking of the virus - 2020 has been a landmark year for technological disruption.
It is no different for small businesses. Business owners and CFOs will have to consider investing in technology to draw long-term sustainability benefits. Manyissues caused by a lack of readiness and efficiency hindrances can be addressed by leveraging technology through automation tools, remote meetings, etc. A tangential advantage of this is cost-cutting - very important in creating a sustainable cash-flow cycle.
The pandemic will take a while to fade away. Its effects will linger in our lives and the global economy for even longer. In times like this, business owners have to come to terms with two critical aspects - a) conducting business in a world whose mindset has altered significantly, and b) conservative risk management will be slightly more important than market daredevilry.
The post-COVID-19 world will not be the same as the one before it. It is hard to predict what exactly the future has to offer, but the immediate future calls for cash conservation. Businesses with a sustainable cash flow cycle and a cautious yet agile approach will be the most relevant.
Apollonian Accounting and Business Services, Inc. takes pride in providing your business with the accounting tools, resources, and support needed to make intelligent decisions to continually develop your business and continue to meet your overall goals. Our cash-flow analysis service includes a thorough assessment of your organization's financial condition, financial estimates, and cash-flow sources. For over five decades, we have worked with numerous startups and small- and medium- businesses in California to deliver reliable cash-flow and forecasting services.
To understand how we can help your business withstand the pandemic-led crisis and get back on track, please visit us on our website, www.apollonianaccounting.com, so one of our professionals can respond to your contact request.