ACCOUNTING
Managing Cash Flow
During a Pandemic
Smart strategies for accounts receivables, bank loans, insurance and
inventory management have never been more important.
Compiled by Miles Z. Epstein
Editor, COMMERCE
COVID-19’s contagious and deadly appearance
made businesses and customers virtually
disappear, with most offices closed
and most people taking refuge from the virus in
their homes. It was as if a switch turned off the
economy. The consequences for cash flow have
been and remain significant. Here are some recommendations
for dealing with this situation
using smart strategies and proper decisions.
Citrin Cooperman
By Michael Napolitano,
CPA, Partner
Business owners understand
that cash flow sustains their
business. In the past, a financial
crisis gave them time to
plan accordingly. What happens when cash
flow disappears overnight? The pandemic shut
off cash flow overnight for many businesses,
forcing them to take drastic measures. At the
same time, other businesses are trying to manage
accounts receivables to get their cash due.
Cash business, like restaurants or retailers, can
negotiate with vendors to only pay for current
purchases and work out terms for old balances,
once the economy opens up—and reach out
to non-essential vendors to discuss payment
terms that begin when the economy can open.
Renters should negotiate with property owners
to postpone two to three months of rent
until the end of the lease. In addition, banks
offer loan payment deferrals for any outstanding
debts. Businesses that are open but experiencing
a slowdown in payments should stay
in contact with customers; assess their ability
to pay and establish short-term payment terms
that accommodate them, while sustaining
cash flow; take credit card payments; and discount
older receivables. If using funding from
the Paycheck Protection Plan, be certain you
comply with SBA rules as you use the funds
over the eight-week period.
CohnReznik LLP
By Kevin Clancy, CPA, J.D.,
CIRA, CFF; Global Director,
Restructuring and Dispute
Resolution Practice;
CohnReznick Advisory
Companies are trying to maintain
cash flow in the face of devastating revenue
declines brought on by the COVID-19 pandemic.
Here are some recommendations to help get
you through these difficult times. Focus on your
income statement. For businesses that primarily
rely upon physical locations to service customers,
online sales can be a lifesaver. Consider leveraging
platforms like Amazon. Look to your balance
sheet to create liquidity. Monetizing account receivables
takes creativity. Offer discounts to customers
who pay early and encourage payment
using credit cards. Return excess inventory and
supplies. These steps can provide immediate cash
infusions, reduce accounts payable and minimize
storage costs. Reducing your receivables
and inventory may improve your borrowing capacity
and the availability of funds within your
credit line. Discuss rent abatements or deferrals
with your landlords. Contact your vendors to
discuss more-favorable credit terms for existing
debts and future purchases. If you have bank
loans, lenders are accommodating their customers
amid current circumstances. Request a forbearance
or interest-only payments until things
get back to some semblance of normal. See if you
qualify for government loans and grants. Also,
review your insurance policies as you may be able
to file a business interruption claim.
Grant Thornton
By Bryan Merrigan,
CPA, Office Manager Partner,
Metropark, Iselin
Cash is king—and getting an
immediate return on daily cash
needs is critical to survival. Businesses
should review their forecasted revenues
and spending to get a handle on their cash
runways. They should also relentlessly control
costs—doing things like reviewing variable costs
and monitoring cost-reduction activities. Un-
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