Knowing how much money you have today and having the ability to quickly project how much money you will have next week is a much more daunting task these days. 

 The process has not necessarily become more difficult, it is the result you’re looking at that may be difficult.  Nonetheless, you need to know the reality of your cash situation.

Here are the tools and processes you should have in place to be able to accurately manage your money:

Note: You do not want to share the actual “Break Even” with your sales team.

1. Cash flow projection tool.

Although you can purchase special software to do this or even take a stab at utilizing Quickbooks for this, a basic excel spreadsheet with inflows and outflows will do the job. 

2. Breakeven Sales Analysis.

How much you need to sell in order to ‘break even’ is a critical number to know. Many businesses will see a significant shift in their gross margin and fixed expenses (overhead). Being that these are the factors included in figuring break even, any major change in these numbers will alter your break even. Sales projections for your team will now need to reflect the change in break even.

3. Payables and Receivables Communication Strategy.

Utilize your accounting software to pull a copy of each report and add columns for ‘communication, date, action point, and follow up date’. Contact your vendors and customers to let them know that you are in this crisis with them and you will work together so that everyone wins. ( Win/Win). Once a contact is made with a vendor or customer, note the date, what was said or agreed upon in the communication, the ‘action point’ that will happen, and the date by when it will happen. If you have people managing accounts payable and receivables for you, you will want to see this documentation as a point of accountability and strategy for moving forward.

4. Expense Review.

This may seem obvious to you, but consider a couple of points when you revisit your expenses.

1.) Avoid cutting expenses that will generate you revenue in the near future. Marketing is the first item that come to mind. You should look at INCREASING your marketing spend during this crisis. I’ll address this in another article.

2.) Delay versus cutting expenses where you can. Can a subscription be pushed out a month just by making a call ? What other expenses can you delay?

3.) Cut the fat you’ve been hesitant to cut in the past. You may have had excuses for keeping it last year, but now is the time to eliminate it. What are the ‘luxuries’ or ‘nice-to-haves’ that you can now do with out?

5. Operation Budget Review.

It’s now time to start going back through your operating budget and start adjusting. I realize this is somewhat of a moving target since things seem to be changing daily, but the process of starting these discussions with your executive team will only help you be more in tune and ready to move when business opens up again.

It’s hard to manage what you don’t measure. Management of money is absolutely crucial now. Measuring and monitoring is absolutely crucial now.