During and after any period when economic activity is depressed, companies that survive the process are those that manage their cashflow effectively.
A number of businesses will be in the fortunate position of heading into the current COVID-19 crisis with adequate cash reserves to see them through, many others will not.
In both cases, minimising expenditure and maximising cash inflows should be the name of the game.
Last week we stressed the importance of gathering in monies due from customers. This week we offer a number of additional ideas to bolster cash inflows. They are:
- If you have stock gathering dust in your storeroom offer it to customers at a discounted price – set an initial price reduction to cost – converting these items to cash makes sense. It is also a win-win strategy: you free up space and add to cashflow, and your customers will perceive that they are getting a bargain.
- If stock items are perishable, food for example, set up distribution to food banks and relevant charities and make sure that local press and radio stations are made aware of your generosity – this may not create cashflow, but it will provide free publicity.
- Can you sub-let space office or factory space for storage?
- Do you have any redundant plant or IT equipment that you could sell online – eBay etc.
- Keep your accounts up to date. If you have made losses you may be able to carry losses back in time and recover tax paid in previous years.
You can also achieve the same benefits by reducing expenditure. See our further article on this aspect in our newsfeed next week.
And we can help. Call if you want to brainstorm options that you may have, to convert assets into cash.