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Do You Have Any Tips for Handling Payables and Receivables During This Time?

During this time of unknowns, preparing for multiple financial outcomes and creating contingencies can help you better handle things proactively versus reactively. As such, your accounts payable and accounts receivable balances are going to play an essential part in creating different cashflow scenarios. Here are some tips for helping you with both.

Accounts Payable 

After you’ve taken some time to create different cashflow scenarios, take an in-depth look at how your payables schedule can help you bridge the gap. This exercise from An EOS Company’s Guide to Surviving Coronavirus will help:

Your Must-Pays

These include employee wages, payroll taxes (be sure you’re NEVER late on those!), and anyone else who could shut your business down if you didn’t pay.  It also includes the small, talkative ones in your community who would gossip about you if you didn’t pay.

Your Strategic Partners

Strategic partners are those vendors who your business is important to you and those where you know each other well. These partners have a vested interest in you succeeding, so extended terms can be negotiated here.

Tip: Contact your bank. They may be able to defer loan payment obligations. 

Everyone Else

Everyone else includes any vendor(s) that can be easily replaced by another supplier. You may have to make the difficult choice of delaying payments to this group.  While this is tough for all involved, it may be necessary when you’re talking about survival. 

Accounts Receivable 

It’s important to remember that savvy customers will also be classifying their receivables in the same way you will manage your payables. This means there could be a high likelihood that they will delay payments to you.  Some may be on financial thin ice, so be sure to acknowledge the risk and prepare for a potential (full) loss on receivables from them.

Here are some tips to help you successfully handle receivables right now:

  • Decide NOW on how much credit you will extend to each customer. 
  • Develop a communication strategy for each stage. For example, how and when will you let your clients know you will extend them credit?
  • Engage your top 20 clients in a simple conversation to identify where they are at, so you can forecast more realistically. 
  • Identify which of your clients are listed as essential business and reach out to them to see if you might be able to offer them some assistance. Printing for them will also keep you going too. 

Keep Marketing

Even though it may seem counter-intuitive, it’s vital that you keep marketing to your clients.

To accomplish this, you may need to get a little creative. Is there a buy now, pay later option you could offer? While this may not help your immediate cash flow, it could keep work coming in that you will benefit from later. 

For more tips on managing the financial and HR aspects during COVID-19, check out episode 002 of the Coronavirus Resources For Printers webinar series.

Read Other FAQs Regarding COVID-19:
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Contact us today for more information on how essentials like these can skyrocket your business.

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