What do you need to survive in these difficult times?
You need to know how long your money will last.
That is why your balance sheet is the most important tool you have during this Covid-19 crisis.
This is because your balance sheet tells you, how much:
You owe – your creditors.
What are you owed – your debtors.
Cash you have – your bank account.
How much stock you have to sell.
You balance sheet tells you all this. In conjunction with your monthly sales figure you can manage your cash.
Therefore, divide your monthly sales figure into the debtor and creditor figures on the balance sheet, giving you two figures. If your debtor figure to be lower than the creditors one, your creditors are funding your business. Amazon grew this way.
You need to get your cash in, hold it for as long as you can before paying it out. Your balance sheet is the way you monitor this.
To get paid faster, talk to your customers. Ring them and explain that due to Coronavirus you need to change your terms. Ask for payment on delivery, but, if they are a large company it may not be possible, then reduce your terms to 14 days.
Now, ring your creditors to explain that due to this crisis you will not be paying them on the due date, you will then need to give a positive date as to when you will pay. You will be surprised how many will accept this. Some of my clients have offered to pay a much reduced sum on a regular basis, and again their proposals have been accepted.
The rule is whatever you agree you must deliver.
It works because everyone is in the same boat and we all still want our customers and suppliers when we come out of this.
I have always believed that the most important word in the English language is “communication”, therefore, to make this work, KEEP IN TOUCH.
You can grow out of this, this way?