Due to Singapore government various support schemes, most companies have managed to pull through in the last couple of months. Despite getting 4 months of mandated rental waiver, local employee subsidies and foreign worker levy waivers, many companies are still losing money resulting in companies cutting down manpower. With uncertainties ahead, companies must review it cashflow accurately. It is what is required to buy inventory, pay employees, secure financing, and ultimately keep the engine of the company running.
Many small businesses, especially the tourism and F&B businesses are unable to survive the economic downturn that comes along with the COVID-19 pandemic. Because of poor cash flow management, companies are forced to shift into survival mode to mitigate the damages that had been done by improving their cash flow to stay afloat.
Here are a few tips in improving Cash Flow for your business to keep in mind:
1. Keep an eye on your cash – Make sure to always have a comfortable working capital of 2 to 4 months on hand. No cash means that you must rely on banks to pay your debts.
2. Adopt digital solutions – You can opt for cloud-based services that provides real-time access to banking, accounting, and forecasting data to help you make informed decisions. Some of these solutions are capable of tools specifically aimed at cash flow in this difficult time, including short-term projections of your bank balance. Use the time on your hands because of the downturn to scale up your business processes.
3.Additional Government Support Scheme – Check whether your business is eligible for the various reliefs from the business support programmes announced by the government
- Work-Life Grant (WLG) for flexible work arrangements. Companies can apply for grants and incentives to implement flexible work arrangements (FWAs) such as flexi-load, flexi-place and flexi-time
- Productivity Solutions Grant (PSG) covers sector-specific solutions including the retail, food, logistics, precision engineering, construction and landscaping industries. Latest grant provides companies with business grade laptops, Microsoft 365 and security supports.
- Enterprise Development Grant (EDG), Innovative is the key to build a strong business foundation and helps companies to transform. Companies can obtain grant funds which covers project costs namely third-party consultancy fees, software and equipment, and internal manpower cost.
4. Keep financing options open – While a great business plan is crucial, financing is one of the most important elements a company needs to succeed. This involves using the following methods.
- Merchant Cash Advance
- Bank Overdraft
- Family and friends.
- Angel Investors.
- Venture Capital
- Equity Fund
- Bank Loan
5. Make it easy for customers to pay – The best way to keep cash coming in is to make it less of a hassle to pay. Adopt and easy Point-of-Sale (POS) system that enables you to get cash into your bank account quicker. In recent year, the use of PayNow is prevalent because of zero service charges and immediate cash inflow for the business. Register for PayNow corporate now.
6. Balance your books – If you need to keep an accurate cash balance, and want it done professionally. Get someone who can! Consider outsourcing your accounting to do it.
7. Make productive staffing decisions – Your employees are your most valuable asset, so while downsizing may seem like an inevitable conclusion, consider the alternatives. Figure out your company’s health by looking at how many payrolls you can fund if revenue dries up. Before you reduce salaries, figure out whether you can reduce work hours instead. Asking your employees for less salary to work the same amount will create frustration and decrease efficiency.
8. Negotiate better payable terms. – Call your vendors to discuss extended payment terms-especially larger vendors, who are likely to be sitting on far more cash than smaller companies. Having cash in your account for two additional weeks with 45-day terms compared to 30-day terms could mean avoiding a lay-off or even keeping the lights on.
9. Chase for payment – Gently remind the customer of any penalties they may face in accordance with your late payment policy. Now is not the time to be passive like before where letting invoices go for days or even weeks past due doesn’t always seem like a big deal.
Keeping your business afloat during tough times is challenging, but it is manageable. Setting realistic goals, approaching all decisions with caution, and communicating transparently with employees and partners will help get you through it.