All remote bookkeepers are in the business of helping companies to thrive. Virtual CFOs use a variety of techniques to analyze data and develop fiscal strategies to help businesses flourish. Any remote bookkeeper can attest to the highs and lows that every company encounters. Obviously, no business is immune to occasional lean times.
Business owners, in the home or office, have always had to deal with cash crunches. Often, cash shortages can start out very small. However, without applying proper strategies, they can eventually become unmanageable. Therefore, in this post we’ll discuss the ways your company can survive a cash crunch. Keep reading to find out more.
1. Make Expense Cuts
Usually, most companies have no issues racking up expenses during lucrative phases. However, once things start to become a little tighter, it’s not easy to squeeze out costs. Most businesses with descending revenue assume the decline is temporary. However, while this is sometimes true, it’s important to know when to cut expenses. Among the many benefits of a virtual CFO is that they can help you to deduce where to make these cuts.
Companies must be able to act quickly when expense cuts are called for. Unfortunately, even a brief delay can lead to significant cash problems. When these expense cuts demand laying off staff, it’s vital to seek assistance. Any lay-offs must comply with state and federal employment regulations. However, hopefully you’ll be able to act quickly enough that this doesn’t become necessary.
2. Collect From Clients
During a fiscal crisis, cash is your key to survival. In the event of shortages, you should prioritize efforts to collect payments, look into SBA loans, invoice clients immediately, aggressively collect past due bills and shorten payment terms.
Sometimes, this will require you to seek payment from clients you have longstanding relationships with. In that case, business owners or supervisors should handle these requests personally. If you’re the business owner, your personal intervention will help to preserve an amicable relationship with your client. By stepping in yourself, it will give your request a legitimacy that your employees can’t provide.
3. Sell Your Inactive Assets
Much like families, companies tend to acquire a whole lot of stuff throughout the years. Therefore, it can be deduced that many of these acquisitions are non-performing. Basically, this includes slow-moving inventory, non-productive assets, dormant real estate, locations and product lines. It’s important to really examine these assets with a virtual CFO. As countless businesses have felt the impact of COVID-19, many of them have had to do this to survive.
By evaluating and selling non-essential assets, your business can get a much-needed boost. During cash shortages, these “boosts” can be the difference between surviving and going under. While making these decisions can be difficult, they’re often critical to enduring.
Conclusion – MM Accounting
It’s been said many times that “cash is king” when it comes to business. Also, it’s been said that “cash is the lifeblood of any business.” Therefore, finding ways to save and earn cash can only help your company to flourish. Virtual CFOs are an integral part of earning (and saving) the cash you need to keep your business afloat.
Using any of these techniques can help your business flourish during difficult times For more information, contact MM Accounting today!