No matter what industry you work in, your company has been likely affected by the COVID-19 pandemic. Many companies, especially in the harder hit industries like tourism and hospitality, are facing cash flow issues. Even if your company’s cash flow has remained steady or you have ample cash reserves on hand, you need a solid strategy to weather this crisis. Outsourced accounting can provide the guidance you need.
As you work to manage your cash flow during the pandemic, outsourced accounting can help you:
Concentrate on cash conversion
While you may typically be concerned with big-picture performance, now is the time to focus on invoicing and billing. Outsourced accounting can help you manage your company’s accounts more efficiently, so receivables can be turned into cash as soon as possible. In addition to focusing on sending accurate and timely invoices, your company may also need to improve its collection practices, especially for customers that seem to be delaying their payments.
Locate places to reduce cash flow
Outsourced accountants can take a closer look at the variable costs of your business and identify areas where cuts can be made. You may have already put some of these changes into effect, such as hiring freezes, limiting travel and cutting discretionary spending on training and entertainment. Labor costs are another consideration that an outsourced accounting firm can help you manage. For example, your company may ask its employees to take unpaid leave or cut their schedules in order to avoid layoffs.
Evaluate key performance indicators (KPIs)
Outsourced accountants can review important metrics related to cash flow, such as collection days (the time it takes to receive a payment) and payment days (the time it takes for your company to pay an invoice). A look at inventory turnover can show how long it typically takes your business to sell what it has on hand. When you have a clear grasp of KPIs related to cash flow, you can make more informed decisions about your company’s future.
Find sources of assistance
Your company may need relief from one of the emergency funding programs designed to aid business owners during the crisis caused by COVID-19. Outsourced accounting can help you find the one that’s right for your business.
If your company needs help navigating cash flow issues during the pandemic, talk with one of the experts at Wegner CPAs.
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