Humanity, healthcare systems, and business sectors around the world are widely affected due to COVID-19. While many industries have gone through a hard time across the globe, some companies were and are operating fine, for example, medical manufacturing, and all organizations working with healthcare providers. Cash comes as far as the business runs. But many SMBs are still struggling to manage their financials in order to maintain cash flow, streamline processes, etc.

Financial management is a vital part of a business/company. In fact, it plays a more crucial role in times of crisis like the current. To get more into details of this topic, let’s read how company leaders define the prominence of financial management for growing businesses amid the COVID-19 crisis.

Michael Hammelburge

Michael Hammelburge CEO, The Bottom Line Group

Financial management is now more important than ever in this time of the pandemic.

Businesses have started to realize the importance of keeping their employees safe, realizing the risk of a global health scare to their operations, and fixing disruptions in the supply chain.

While reports tell us that a global recession is likely to be more massive than what was predicted, businesses must learn to slowly cope with the situation now that countries that have decided to reopen their cities are now experiencing a second wave of the pandemic (such as Singapore and Japan). A full recovery is still a long way to go as the global economy will experience further blows to supply chains and consumer demand.

Financial management is necessary in this regard. In my firm, we’ve simulated various cases on how much cash we need in the next month, quarter, and remaining months of the year. Our group has contacted our financiers, suppliers, and stakeholders and continue to actively engage with them. We ironed out issues that we have before the end of 2019 and explored more possibilities on how to ensure our financing and keep working capital requirements to a minimum. We’re focused on cash, short-term and long-term credit, and liquidity.

It’s a challenging time indeed, but we continue to ensure our coordination with our staff and stakeholders to monitor our balance sheet. Cash is important, and our focus has to be maintained on receivables, inventory, and, of course, our payables. We’ve contacted our suppliers to extend our payables so we can minimize the pandemic’s financial impact on our operations. To minimize issues, we continue to communicate with them on a constant basis.

Finally, planning for recovery can never be too early. We’re constantly communicating with our existing clients and discussing with them how our services in cost reduction and tax analysis can be influential in their path to recovery. When they feel that they are being supported in their plans to make a complete turnaround from a sharp downturn brought by this crisis, they will continue to nurture their relationship with us in the long term.

Also Read: Experts Opinion: Signs Your Business Should Outsource Accounting Services Now!

David Walter

David Walter, Business Owner Electrician Mentor

Financial management helps maintain cash flow and business relations.

As a growing business, we’ve done quite a bit in the area of financial management since the advent of COVID-19. We’ve reduced non-fixed costs in many areas, such as digital advertising, and some of the basic supplies needed to run our business (nothing to do with employee safety, however).

We’ve also taken a harder look at how our accounts receivables and payables are being handled. We’re working with our vendors (when it makes sense to) on delaying payments for just a big in order to keep our cash flow as healthy as possible, and were also as compassionately as possible trying to make sure that the folks who owe us money for products and services and making their payments in a timely fashion.

These two strategies have had some impact, but it’s a fine line, and you need to be careful so as not to damage any particular relationship in the long-term. And although we haven’ done it yet, we are thinking about other potential streams of revenue we can launch to improve in that area.

Laura Fuentes

Laura Fuentes, Infinity Dish

Redirecting funds and crisis response protocols!

While financial contingencies have long been an aspect of our business, this is truly an unprecedented situation. Any business strategist out there with a pandemic sub-clause deserves a medal right now. Still, market shifts often occur, and we are treating this in a similar way. For Infinity Dish, the challenges have been different to most. We’ve actually seen a 32% rise in sales as the internet and TV subscriptions have become an increasing necessity for those stuck at home. Where we have struggled is with our installation services, as many staff has been quarantined, and customers are worried about breaches to social distancing.

Currently, around 10% of technicians are absent at any one time – although this varies weekly as the pandemic evolves. We refocused on financial planning in an effort to redirect our cash flow to plug the holes in our business. Fortunately, we’ve managed to divert our sales increase into building our workforce, ensuring customers still receive a streamlined service. We’ve also moved our efforts away from marketing somewhat, as customer demand and retention is showing a natural increase with so many people now at home and online.

Also Read: Focus on Business Growth & Leave Accounting Complexities to Professionals

Chris Fletcher

Chris Fletcher, Crest Capital

Companies are maintaining cash reserves as part of financial management.

My name is Chris Fletcher, a senior VP at Crest Capital. We’re an equipment financing company that helps businesses get the equipment they need to grow. We’ve been in business since 1989, so we’ve seen our share of booms and recessions. One thing we’re seeing right now in this Covid-19 crisis is growing companies are using financing more than ever, and the reason is to keep more of their own cash available. In short, right now, they feel it makes more sense to borrow to buy needed equipment, while keeping their money in the bank.

Jennifer Barnes

Amanda Kendal, EA Business name: Elevating Profits, LLC

Financial management is something more and more businesses are looking at differently as a result of Covid-19.

As a fractional CFO, we have been working with several of our clients on just that.

Cash flow management, although always important, has become paramount for business owners during this time. With less revenue coming in, managing to ensure less expenses are also going out and that there is enough cash to get the business back to being fully operational on the other side of this is one of the top focuses.

As a business owner, I have begun looking at things with a much more critical eye. Really looking at what is the benefit of any given expense to the business. I have broken everything out into three categories- necessary, beneficial, and neither of the above. Anything that falls into the neither of the above was cut immediately. The beneficial category required tracking ROI for those expenses. What was it bringing in revenue-wise to the business? I aimed for an ROI on these expenses of 3 to 1. IF any expense was not giving that return in the beneficial category, it also got cut right away. This has left me with the necessary overhead expenses and the expenses that are benefiting our revenue. By doing this, I have managed to cut expenses by almost 20% in the short term, but I have also shifted where some of the ‘beneficial’ expenses were and, in turn, have been able to increase revenue as well during this pandemic.

Christie Lawler

Christie Lawler, Founder & Owner

I have never borrowed a dime or taken outside funding or investors.

What a great topic! So many small businesses utilize funding resources, and there are so many paths to take when choosing how to start or grow your own company.

I own CJL CONSULTiNG. We are a niche marketing agency that serves the restaurant, hotel, and entertainment chains across the U.S. I started my company back in 2009 without any funding other than my personal resources, and when I relaunched and rebranded in 2017, I followed the same path. I chose to follow a less conventional path than most startups in that I have never borrowed a dime or taken outside funding or investors. I felt then – and still do – that it is a badge of honor to self-fund my company. I chose fiscal responsibility as my investment strategy only using the revenues my company brings in to fund our growth, new product/service lines, and salaries.

This strategy has paid off in that we are able to stay afloat without interest payments or stakeholder concerns to add to our list of worries with the effects that COVID has had on our ability to generate revenue. I am so grateful to be able to keep our team employed while we navigate new service lines and revenue streams. This challenge of pivoting and growing our business is only strengthening our team.

Also Read: Roundup: What does an Accountant Do? Ask the Experts!

Rizwan Girach

Rizwan Girach, Owner of Chessgammon

We are currently turning over more than usual.

Indeed in the sector that we currently work in, we have found growth in the traditional board games industry to a certain extent. This does not completely explain certain struggles financially that the games sector faces. Although, as a games business, we are currently turning over more than usual for this particular month, we indeed are finding a large number of our orders being placed on hold due to large restrictions facing other countries. This then has an impact on the type and quality of chess and backgammon sets we can offer to our consumers.

Financially as a business, we are still reliant on expenses to pay off, and as a business dealing with the volume can be difficult. We have to manage by also closing our store to the public to protect our staff and our customers; we also have to take measures on not relying on the furlough system placed by the government where necessary. Although certain aspects of the business may be growing, we also find that other parts of our business are also on complete hold due to the crisis we have faced. We hope this helps.

Scot J Chrisman

Scot J Chrisman, CEO THE MEDIA HOUSE

We should understand the processes revolving around financial management.

In this trying time, smart financial management is a great help to businesses. As a business owner, I really put much time into thinking about financial decisions that I make because every cent counts. According to the study, “82% said that poor cash flow management or poor understanding of cash flow contributes to the failure of a small business.” Thus, we should understand the processes revolving around financial management.

Here are two examples of the prominence of financial management during Covid-19:

  1. Availability of funds. Businesses should monitor if they still have sufficient funds to operate. Having a track of expenses and capital available will give you an overview of how to manage your finances.
  2. Setting long term goals. Financial management is vital in business planning. Now that we are in an economic crisis, we can use this to set our business goals for the next three months, a year or so.

Conclusion

These are some of the interestingly impressive strategies for financial management shared by business leaders. Through this post, we learn that financial management is vital and can be optimized by implementing smart and effective strategies and policies. However, desired outcomes also partly depend upon your accounting staff. In the current time, when the world is going through healthcare and financial crises, many companies are either facing a shortage of resources or lack of capital for recruitment. Meanwhile, Accounting To Taxes is offering quality financial accounting and reporting services at affordable costs. We offer a wide range of accounting services to businesses across the globe. Are you concerned about reporting your business finances to authorities? You need not worry! We can help prepare quality, accurate financial reports for your business. Contact us to know how we can help you. Call us at +1 646 688 2821 Or email at info@accountingtotaxes.com.