Cash Flow Management Amid COVID-19

How to manage cash flow?

In corporate world, cash flow is similar to the heart of a body, as much as a healthy heart is the key to a person’s vitality, so is healthy cash flow to a Company’s financial wellbeing.

Just as the small and medium enterprises (SMEs) look forward to seeing their declining businesses slowly recovering from COVID-19, the implementation of 2 weeks CMCO announced by our senior minister is back to haunt their businesses again, especially for SMEs located in Selangor, Kuala Lumpur Putrajaya and Sabah.

Inter-district travel will be barred during this period. Workers will need to show their work pass or consent letter from employers in order to move from a district to another and this will result in lower sales opportunity that would greatly affect the Company’s cash flow. What is worse that they have to start repaying their loans on October, make it even a bigger financial burden on the cash flow.

In this article, we will address three ways that could help you to sustain the cash flow amid this challenging time:-

1. Keep track of expenses

Having a clear picture of the Company’s monthly expenses can highlight areas where you may be able to pull back spending. Cut out any that are unnecessary and try to minimize the necessary expenses as much as you can to operate the Company at its minimum level.

For overhead expenses such as utilities and rent, try to negotiate with the person in charge in order to secure a defer payment or lesser payment. Eliminate any project, expenses or business that generate lower return on investment (ROI) and focus on the one which generate a higher return.

2. Seek assistance from financial institution

Even after the moratorium has ended, Prime Minister Tan Sri Muhyiddin Yassin said bank are still keen to providing various targeted repayment until next year, based on the needs and financial situation of the applicants. If you have not done so, we kindly advise you to contact your bank to request for repayment assistance immediately.

It is a simple and straightforward process with a high approval rate of over 90%. Most importantly, accepting this repayment assistance will not be reflected in the Central Credit Reference Information System (CCRIS) record and it will not affect your eligibility for future financial applications.

3. Negotiation with debtors and creditors

For creditors, try to negotiate with your creditors to take advantages on the possible early settlement agreement / different payment term.

For debtors, we need to understand whether they have the ability to pay and the time of payments. There is also expectation that the payment will be slightly late amid this challenging period. However, Company can consider giving them incentives or discounts to encourage early payments. Sometimes small discounts are enough to speed up the collections during economic hardship.

Besides that, you can also seek professional support from a corporate advisor to assess your situation and provide you with a debt restructuring or debt recovery management plan.

Remember that this is not the right time to talk about profit. Cash flow management is of utmost priority for the survival of a business on this critical period. Be alerted, take proper measurement and utilise any resources and assistance available at this moment and we believe that we can pull through this difficult situation together.

If you have any further queries, please do not hesitate to contact us at your convenience.

Leave a Reply