7 financial management tips for entrepreneurs
LIQUIDITY IS PRIMOR IN A PERIOD OF ECONOMIC PERTURBATION
So here are 7 essential tips in short-term cash management for your business:
Make a short-term cash budget over the next 13 weeks (3 months)
At this point, you will be able to forecast cash outflows based on expected cash receipts and your available credit.
Don't forget to include recently announced government measures allowing the deferral of certain cash outflows, such as instalments and corporation tax.
Test crisis scenarios
Taking your annual budget, vary certain assumptions (e.g. a drop in sales or supply difficulties) to see the cash requirements. Financial solutions must be planned in advance to offset these needs.
Optimise your working capital
Speed up the collection of your accounts receivable as much as possible by means of a quick collection, a deposit request or an agreement with staggered payments.
Prioritise your purchases and cash outflows. Negotiate payment agreements with your suppliers in advance.
Reduce and maintain stocks to the minimum level, and prioritise the reduction of old stocks even if it means selling them at a discount.
Sell any surplus assets not useful to your operations.
Consult your financial institution and your financial partners
Maximise credit flexibility. Several exceptional measures are currently available from financial, venture capital and government institutions, such as working capital loans and moratoria on borrowing. These are becoming essential tools at this time. Alternative financing can also be considered.
Understand and apply recently announced government measures supporting businesses
Mallette is on the lookout for any government announcements and keeps you quickly informed by sending out its special bulletins.
Keep the necessary information and documentation on hand to help you apply for assistance.
Analyse and rationalise your cost structure if necessary
Although sometimes difficult to carry out, rationalisation measures will help in the short term to counter, for example, the negative impacts of a drop in income.
Review your cost price
Less profitable or loss-making lines of business may be present. Prioritise the sale of goods and services with the highest profit margins.
MALLETTE IS VERY CONCERNED ABOUT THIS SITUATION AND ITS IMPACT ON YOUR FINANCIAL SITUATION. We HOPE THESE TIPS WILL HELP YOU GET THROUGH THIS CRISIS BETTER.
Do not hesitate to contact your Mallette advisor or associate in your region among our 30 offices
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