Managing cash flow in the age of coronavirus slowdown

Apr 16, 2020 | Cash Flow, Corona Virus | 0 comments

Cash is king.

There, I said it. But you already know that as you watch your bank account like a hawk through this business slowdown driven from the COVID-19 pandemic. With an unprecedented slowdown across almost all industries and small businesses, most business owners are wondering if their financial well will run dry.

How can you hold on through the crisis and have enough cash to ride this out? It is tough, but can be doable. Here are a some strategies to consider.


  • Start with a realistic budget– Throw your old 2020 budget in the trash. Now rebuild line-by-line from the bottom-up. Using a zero-based budget, start with what costs must be paid without any revenue. Make every expense be justified. Then, build incrementally as you plan your actual results. If you really want to go for it, plan a best case and worst-case scenario.


  • Extend Payables – Many suppliers and landlords are willing to work with you to modify payment dates or create a payment plan. They need cash just like you do.


  • Collect receivables– You should know who owes you. Contact them and collect as quickly as you can. Make sure you are taking electronic payments. Offer discounts if necessary. Often a quick phone call or email is the nudge your customers need to issue payments.
    • Adjust payment terms – collect payment for new work up front or immediately upon completion rather than extending credit.


  • Sell some stuff – If equipment and inventory is sitting idle, it might be time to have a fire sale. Get it listed and sold if you do not need it for ongoing operations.


  • Make all costs variable – Variable costs rise and fall with revenue. Fixed costs like loan payments, rent, salaries and insurance can drain cash. Take a hard look at every area with a fixed cost. If you can, re-negotiate terms or shop for other options.
    • If you have sold equipment, consider renting instead. You have then shifted the fixed overhead costs of ownership to variable costs directly to the job.


  • Financial assistance – This generally comes from two sources.
    • Lenders – consider what credit lines or loans you will need to take advantage of. Credit cards are great but are an expensive way to float a business.
    • Government – The CARES Act has injected billions of dollars into the hands of small businesses. Review your options in this blog post.


According to Chase Bank, the average business holds 27 days of cash reserves. Depending on your industry, it could be much less than that. Many businesses could run out of cash with a single contract put on hold or delayed.

This is an unprecedented time for businesses. Whether you are operating through the crisis or are forced to close due to a government order, there are options for your business cash flow.

Keep your head up. We are in this together. Your business matters. Insight Financial would love to serve your business in any capacity.



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