Tips for small business cash flow management

At UBT, we know small business is the lifeblood of our economy — and right now, things are tough for small businesses. Derek Kay and Nick Ludwig, UBT credit analysts, helped us put together some tips that can help position your business to weather the current environment and improve cash flow.

Assess your essential functions. Be prepared to change your business practices, if needed, to maintain critical operations — e.g., identify alternative suppliers, prioritize existing customers, or temporarily suspend some of your operations. Identifying alternative supply chains for critical goods and services is especially critical, as some goods and services may be in higher demand or unavailable.

Forecast cash flow and boost liquidity. Create a 13-week cash flow forecast, which should be stress-tested to explore all likely scenarios, including worst-case scenarios. You must consider your cash needs looking ahead after thoroughly reviewing fixed and variable expenses. Some steps you can take:

• Improve liquidity via extended credit, a second mortgage, or a business loan. (Contact a UBT business banker for options, which may include a business line of credit or a corporate credit card. We’re here to help!)
• Maximize cash inflow by offering discounts to customers and clients who pay more quickly.
• Determine which expenses are vital to your business’s operation and ensure your ability to pay those first.
• Reschedule payments, as allowed without fees, toward a longer payment period for outstanding expenses. Try to work with vendors, keeping in mind that many of them are facing the same issues you are.

Reach out to key contacts. Be proactive where you can. Call each of your key business relationships — customers, suppliers, partners, consultants, and anyone else critical to your company. Ask them how they are doing. Tell them how you are doing. Let them know you want to work with them to find ways for everyone to make it through the current situation and beyond. The gesture of sincerity and goodwill is sure to be appreciated by these individuals, who are likely right there with you in the same boat.

Log your liabilities. Document ALL impacts and losses related to the coronavirus in a clear and comprehensive manner. Effective record keeping can improve your chances of getting reimbursed punctually for business insurance claims and receiving assistance from the federal government or your local small business administration. Some steps you can take:

• Establish a separate account or charge code in your accounting system under which all coronavirus-associated costs/losses will be captured; this will be the tracking mechanism used to evaluate all such costs across your business.
• Calculate your company’s operating “baseline,” which means conducting a two- to three-year review to compare your business’s performance before and during the pandemic.

Seek financial assistance to combat slowing sales. A low-interest loan or grant can help you stay afloat while revenue dips below normal levels. Talk to a banker who’s willing to take the time to get to know your business. At UBT, our bankers will get to know you and your business personally and provide you with options that can help during this time and well into the future.

Enlist the professionals. With the recent changes in tax code and eligibility requirements surrounding government stimulus programs, including PPP, EIDL, and other CARES Act assistance, a good CPA will more than pay for the cost of their services with thoughtful analysis and effective tax planning strategies. Attorneys and insurance brokers can also assist with business interruption events.

Plan for the long term. Work with suppliers, investors, partners, and local officials frequently to learn how you can start to implement safeguards that will help you stay profitable if an unforeseen circumstance arises. 

Incorporate merchant card services through UBT. Clover point of sale devices provide payment flexibility, allow you to gain valuable metrics to better understand your customers, and help to set up loyalty programs to reward your best customers. Process mobile payments via contactless payments, chip/EMV payments, and swipe payments, including Apple Pay®, Samsung Pay®, and Google Pay™.

• Ready right out of the box. Just charge, connect, and pair with the Clover GO app on your iOS or Android device.
• Top-notch security. Protect your (and your customers’) data from end to end with the latest in encryption and tokenization technologies.
• Future-proof your business. Clover POS devices can be as minimal or full-featured as you want them to be. And the platform will always grow and scale with your business.
• Stay on top of your numbers. Monitor sales, refunds, and best-selling items from any computer or mobile device.

Stay informed. Make it a priority to stay up-to-date on the latest federal, state, and local guidelines and coronavirus stimulus legislation. Some resources that may be helpful:

• Federal Small Business Stimulus Aid Programs
• Families First Coronavirus Response Act: What Businesses Need to Know
• Coronavirus Aid, Relief, and Economic Security Act
• US Chamber of Commerce Coronavirus Small Business Survival Guide

And as always, lean on your trusted partners — like the small business experts at UBT. We care about your business’s success, and we’re here to help you however we can.