The pandemic has been hard on everyone across the globe. No industry or country seems to be safe from the negative effects to the economy. There’s been much talk about strategies for businesses to survive the uncertain economic climate.
The media every day are reporting massive layoffs and industries in turmoil. In these times, it’ll be all too easy for most businesses to feel the effects of the crisis, so what can we do?
One of the major scenarios we’re already seeing in some industries is the domino effect of a large company hitting the wall; this in turn affects their suppliers, who then suffer, affecting their suppliers, and so on down the food chain.
What is immediately obvious here is that there are two actions we need to take. I also note that these should be part of standard business practice, not just for uncertain times.
Control your costs
The first one is start by looking for small ways to control costs.
Most organisations can identify a few areas where some small cost savings could add up to a sizeable percentage of their bottom line. If you saved $5,000 a year across 5 different areas, that’s $25,000 that could be spent on better things.
You can start by looking for savings in small items, such as bank fees, transport costs, telephone and bandwidth, office supplies, and the like.
Secondly, manage cash flow.
If your clients hit hard times midway through a project, you could be left wearing the debt. Make a habit of invoicing smaller amounts more frequently, based on project milestones or calendar months. Keep on top of recalcitrant debtors — if you start chasing them the day after the bill is due, it trains your debtors to pay and clients to know that you mean business.
Chasing your debtors consistently means you’ll have their payment sooner, and it’ll be less likely they’ll become a bad debtor.