CFO’s are stressing and stretching because of Covid-19. As the pandemic started a few months ago, most of the small businesses are suffering due to the cash crunch. Large organizations started to take control of cash reserves to prevent liquidity risks due to macroeconomic uncertainty.
According to a survey, small businesses have cash reserves of up to 27 to 47 days. While large organization cash reserves are enough to manage expenses until 6 months. It’s critical to keep up positive cash flow during the lockdown to manage solvency & sales snags. Forward-thinking CFO’s curtail non-essential expenses to stay viable post-pandemic and prevent downside risks for the business.
Check out a few strategic cost-cutting measures to cut superfluous expenses amid Covid19 as advised by chief financial officers in a survey.
Reach out to bank managers, credit unions, credit cards or other lenders to check if you qualify for forbearance during the crisis. Check if the EMI payments shall be suspended for a while or until further recovery without any deferred interest rates or fewer interests.
Delay payment to suppliers, landlords, and other utilities
Talk to landlords for reducing payments such as rents, utility payments, and suppliers’ credits or negotiate temporary relief to save on costs. Pay only for critical small-scale suppliers with good ratings to prevent conflicts on approval.
Freeze travel & entertainment expenses
Minimizing the travel for the most critical function eliminates the risk for employees and travel-related expenses during a pandemic. So, it is very crucial to cut costs associated with travel & entertainment and explore opportunities to remotely set up meetings, conferences to save on overheads.
Cancel leadership events/offsite
Set Up an emergency task force to develop an event contingency plan to discuss the implication of canceling or postponing all leadership events/off-sites. Reschedule the event based on multiple scenarios or engage through virtual events with a health and safety plan.
Delay CAPEX investments
Focus on canceling or delaying the capital improvement projects or renegotiate contracting terms on payment reduction or deferments for unused leased equipment, fleet vehicles, office spaces, SAAS platforms, software applications that are redundant and expensive at the current situation. Defer on-premise technology spend.
Reduce consultant/contracting spend
Talk to your consultants and contractors to pause services or close accounts temporarily. Explore free consulting services from SCORE or small business development centers, if required. Renegotiate the essential contracting/consulting services pricing to your favor as much as possible.