Seven Tips To Improve Working Capital
For Your Business Through The COVID-19 Crisis
Focusing on cash flow optimization can help companies reduce unnecessary costs, improve the customer experience, and regain profits more quickly once markets stabilize.
A couple of months into the COVID-19 pandemic that struck the world unexpectedly (and with full force), causing uncertainty and instability for both companies and individuals alike, we all learnt that the first challenge in keeping our enterprises running was cash flow. Most industries were hit hard, and consequently, businesses were forced to lay off employees, especially in the oil and gas, hospitality, retail, travel, and entertainment sectors. Others, such as tech companies, benefited from the lockdown.
Therefore, only the strongest and the fastest action takers survived, and for survival, the first point to tackle is always the cash flow. Cash is king for any establishment. Overall, this pandemic has forced all businesses to rethink their strategies, and focus on determining how their business will look like once the world economy emerges from this crisis. Here are some of our tips from BMB Group to help businesses improve working capital:
Drive change by identifying your priorities
Firstly, understand your financial situation, and, secondly, prepare a thorough assessment of the business and where it currently stands.
Prioritize cash flow
Focusing on cash flow optimization can help companies reduce unnecessary costs, improve the customer experience, and regain profits more quickly once markets stabilize. Start focusing on quick win opportunities within the company, and promote cash culture across the organization such as:
- Cash flow forecasting, which is making adjustments that help ensure you have more money coming into your account than going out.
- Setting right controls on avoiding early payments
- Avoiding unnecessary purchases, and motivating the team to reduce costs and optimize cash
- Monitoring customer payment performance
Encouraging the team to focus on selling products lying in inventory to generate quick cash
Ensure KPIs are available for business leaders to use in order to drive action plans. Provide your managers with real-time, intelligent dashboards that equip them with the insight they need.
Consider customers and suppliers
Monitor the financial health of customers and suppliers. Work with customers to set a good incentive for payments. Prepare a set of payment priorities to suppliers, so that your operation will not be affected, and focus on settling all the important payment to suppliers that you may need currently.
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