Managing Cash Flow is Both Urgent and Important
Right now the key is to keep things simple. How? Focus on the areas of your business that are necessary for its sustainability: leadership, employees, operations, and cash flow. This worksheet from MassMutual can help.
It will help you consider what you do in your business related to these four critical areas in terms of their importance and urgency. Using the worksheet, you can sort out the things that are most important and most urgent to be done. Things that are less important and less urgent should be eliminated. Plotting these activities into four quadrants can help you develop a prioritization road map for surviving through the current environment and beyond.
Do: Manage cash flow, collect receivables, negotiate payment terms, and communicate with employees.
Plan: Update website, innovate new products, research new suppliers, and build relationships.
Delegate: Answer emails, respond to customer inquiries, follow social media, and complete reports.
Eliminate: Binge the news, follow gossip, busy work, and escape activities.
Managing cash flow is both important and urgent. Tracking the amount of cash that will flow into and out of your business right now is crucial.
As you go through the numbers, consider the following:
What do the next 5 months look like? How much cash will you receive and need to pay out?
Which suppliers/customers are most important? Prioritize the relationships you cannot lose.
Who can help ease the burden? Remember banks, credit card companies and landlords are suppliers.
This exercise can help determine if there is a monthly surplus or shortfall. With this insight, think about if any cash can be collected sooner or paid out later. Reach out to your customers and suppliers — communicate with them; they will most likely be willing to work with you. It is important to tighten your belt, evaluate your expenses, and ensure you take the necessary actions to weather the crisis. Now is a time to act, not sit on the sidelines.
Provided by Commonwealth Financial Group, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual). ©2020 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 CRN202205-265317