5 ways to better manage your money
We’ve seen the headlines. Millions of Americans are now out of work, and businesses both national and local are struggling to survive while being closed due to the Coronavirus.
And while the initial period of economic shock will eventually subside, there are lessons learned from the past that can help your business weather the storm and come out even stronger on the other side.
Here are five ways to better manage your business money during a recession.
Number 1: Use Government Help NOW
Because of the extreme nature of business closures in this country, you need to take advantage of every dime the government is offering as a way to help maintain cash flow. I know that some of you will argue for and against using government assistance, but now is not the time to look a gift horse in the mouth.
This is a time to fill out the necessary applications, and get as much money at the lowest rate possible in order to survive.
Let’s put it this way: if you were dying of thirst, would you turn a bottle of water down from someone you may not agree with. Nope, take the water and live to argue the merits of our country’s social contract and construct another day.
Talk to your regular business banker and get everything you need in order to get approved for stimulus money to take care of your business and your employees.
Number 2: Eliminate Extras
I know, you had huge plans for 2020. You were going to buy new equipment, hire a few more sales people or maybe just purchase a new piece of furniture for the office.
But now, that’s all gone out the window. Now is the time to get the pencil out, start going through every one of your bills and other expenses in your spreadsheet.
Perhaps you are spending money on computer software that only gets used occasionally but costs several hundred dollars a month for licensing. This is where the expenses eliminated can start to add up and generate serious savings.
Small expenses when added up over the course of a year can make a big difference to your bottom line.
Number 3: Renegotiate Terms
Many people dislike asking for different terms. Others love negotiating for bonuses or extras. Find the person in your organization who is the consummate bargain shopper and have them begin the process of renegotiating contracts and terms of service.
Most vendors know that in an economy like this, there are always multiple options for products and services. And if keeping a customer happy with a 15% discount in the next 12 months will have them stay on, then perhaps that’s a win/win for you both.
Recessions and economic downturns can be tough on businesses, no doubt. But if you’re contemplating cancelling a service, try reaching out and asking for a discount. Maybe it’s not even a discount. Perhaps you can reach an agreement to extend payment terms to net 30 or net 60. Maybe you can offer to pay a little less more often to maintain cash flow. It’s always worth asking for the terms that will help your business, as well as help your vendor.
Number 4: Capture Receivables
I remember when sold the local magazine we owned years ago, we had 60-days until the sale closed in order to capture all the outstanding receivables we still hadn’t collected from advertisers.
Unfortunately, the job of collections fell on my shoulders and I got yet another hat to wear.
But I pursued those collections like a dog knowing that was income and revenue we had already charged, but never collected on. I know some people probably weren’t excited to hear from me, and most were simply honest mistakes of spacing a bill. But I learned a valuable lesson in making sure your receivables and aged invoices get paid.
Start reaching out to the accounts who owe you money. I would start with a simple and courteous email, then move to phone calls and certified mail. As the commercial goes, “It’s my money, and I want it now.”
Perhaps offer to discount the outstanding balance by 10% if the invoice is paid in cash this week. As a last resort, talk to a business or collections attorney like our friends at Weld Riley S.C. who can help you go through the legal channels to get the other party to at least start responding to your negotiations. While it may cost some money for collections, remember, it was money you never had so it might be a good investment.
Bottom line, if there’s money out there that’s owed to you, get after it.
Number 5: Utilize Lines of Credit
If you’re a savvy business owner, then no doubt you have been increasing your credit lines with your local banker, just in case you ever need to lean on that money as a last resort.
Now is the time to make sure you can access that cash and have a fall back position.
Sadly, many people when they need a cash advance or line of credit won’t have the ability or balance sheet to support it once the wolves are at the door.
If you don’t have a local option, you can use credit cards as a stop gap, but be very careful. Most credit cards have high interest rates that can do more damage to your business than the brief period of cash flow problems.
The best advice is to talk to your banker before you need help, rather than when everything is going down the tubes.
Using these five basic steps of better money management for your business can hopefully relieve some stress and put you on better economic ground.
If you need help with business coaching or anything having to do with marketing, advertising or commercial real estate, feel free to contact us at your convenience.
Sarah Stokes and Chris Herzog, who are both former WEAU television news anchors, started STOKES|HERZOG, an advertising and public relations agency in 2014. The agency assists both local and global clients with all of their corporate business consulting, advertising, public relations, and marketing needs including video production, website management, graphic design, social media management and overall marketing and advertising strategy.