Managing your business cashflow in the COVID-19 crisis
6 Actionable tips on cashflow crisis management to sustain your business through the Coronavirus pandemic.
At this stage, South Africa cannot predict the impact of the COVID-19 pandemic, but businesses can expect a significant disruption across the spectrum of size, sectors and industries.
As a dramatic decrease in the demand for non-essential products and services and the disruptions to supply chains intensify, careful cash flow management is critical to business survival.
Here are some actionable tips to help you manage your cashflow during this pandemic:
1. Cut non-essential costs where you can
- A quick way to immediately reduce the outflows from your business, is to carefully scrutinise where variable costs can be cut. Variable costs include freezes on hiring, training or discretionary spend.
- Cut all non-essential costs. Pay special attention to contracts notice periods for cancellation. And ensure that auto-renewing services are suspending.
2. Focus on your debtor collection processes
- Your customers may be considering strategies to delay payments to you, which means that now is not the time to be lax about managing your receivables.
- Focus on your collection process and quickly identify customers who might delay payments.
- Start communicating early with your customers, and offer incentives to pay early, such as early payment discounts.
- Avoid anything that may potentially delay a payment on your side, such as late invoicing or billing errors.
3. Prolong payables where possible
- Wherever possible, try to delay payments. Consider this carefully however, particularly if it could damage a supplier relationship, which in the long-term, post the pandemic, you will need to rely on for your business.
- Instead, have transparent, upfront conversations with your suppliers and:
- Ask for payment extensions
- Review your supplier contracts to determine if you could delay deliveries
- Discuss payment extensions with landlords or even rent reductions during this difficult time.
4. Stay compliant
- The South African Government and financial institutions, such as Standard Bank, are offering relief to businesses to help ensure their sustainability – however many of these incentives are only available to companies that are compliant and up-to-date with their necessary payments.
5. Benefit from standard bank’s debt relief
- We will be providing our Standard Bank Small Enterprise customers (those with a turnover of less than R20 million) with a 3-month payment holiday if your payments are up to date as at 31 March 2020, from 1 April to 30 June 2020 on your Business Loans.
- Repayment will be structured to capitalise on interest and fees. This is an automatic adjustment later but there is an opt-out option. Click here for more information.
6. Reach out to the bank if you are experiencing financial distress
- At Standard Bank, we recognise that business customers are facing monumental disruptions to their business, and meeting financial obligations can be difficult during these times.
- Customers who are experiencing financial distress should reach out to the bank as soon as possible so that we can find a workable solution together to address and resolve the financial distress concerns.
- If you are faced with financial challenges, then contact our call centre for assistance on 0860 123 000.