A regular cash flow is important for any business. A lot of things depend on it too. From paying the vendors and paying the wages to employees to buying the raw materials and keeping the production uninterrupted, all of these things can be managed with your cash flow. In a normal scenario, a disruption in cash flow can be difficult to handle. But during this pandemic, a disrupted cash flow can be the death sentence for a company.
Cash flow consists of two factors,
- Bringing in more cash
- Spending less cash
When you are running a business, it is natural that people will owe money for the products or the services they have availed from you. Hence, bringing in more cash will not only include the increase in profit margins but also getting the money back.With this, a commercial collection agency like Nelson, Cooper, and Ortiz LLC can help you. Now, take a look at the following points to know how you can strengthen your cash flow so that your business can survive the blow during the pandemic.
Collect a Deposit First:
The pandemic has made us all switch to survival mode. And that is why this is a crucial step for you. As a business, when you are providing your client with some service or products before getting the payment, you are practically offering them a loan. Even if a client has a clean payment history with you in the past, during this time of the pandemic, that might not be something to depend on. Many businesses are losing their solid footings. So, to ensure that you get the money from the client, you can ask for an advance deposit. This will, on one hand, help you start the production. On the other, it will prove that the client is serious about their order. If your client is not ready to offer a deposit, then you can ask for their current financial statement to ensure they are in a position to give you the payment on time. This is a proven way according to the experts of credit collection services.
Send Invoice and Follow Up:
Undoubtedly, this is a trying time for every business out there. Don’t be surprised if you are not getting the payment on time. However, even if you know that the client is in no position to pay on time, you must send the invoice. Your invoice is a crucial document that will help you proceed further. Hence, do what you are supposed to do. If you are not getting the payment from the client and no response at all, then do a follow-up call and send an email after one week. Try to hear something from your client. If in 90 days, you don’t get to hear from the client or don’t get the payment, or both, then you need to talk to an agency offering credit collection services.
Don’t Pay If You Don’t Have To:
Given the situation during the pandemic, there are several changes that have happened in terms of tax payment. The federal government as well as the state and local government are allowing later payment by changing the deadlines. Even the rate of estimated tax has changed from the pre-pandemic time. If your profit margin has been down, you owe less to the government. Many financial organizations have also waivered the payment of mortgages during this time. So, if there are some payments like tax or mortgage you can hold off, then don’t make the payment. This won’t make the financial obligation go away. But for the time, you will have more cash in hand.
These steps can help you maintain a better cash flow in your company and your survival during the pandemic will be easier than you have feared.