■ Accounting
Continued From Page 22
derstanding the pressure points in your supply
chain and how it will impact the cash cycle is
critical. Businesses should also bear in mind
that their customers may have less purchasing
power and lower creditworthiness, while they
themselves could see reduced product availability
from suppliers, all of which could create
a drain on liquidity. Moreover, they should remember
that borrowers will be facing tighter
credit terms. Finally, they should communicate
early and often with lenders, be very clear
on your current position, strategy and request.
Your current lender will likely be the fastest
source of additional liquidity. The simple truth
is that it is essential to develop an overall strategy
that balances cost-cutting initiatives with
reduced revenues and provides additional liquidity.
It’s a difficult balancing act at the best
of times, but now it’s an even more complex
problem to solve.
Klatzkin
By John Blake,
CPA, MBA, Partner
For business owners that are
maintaining operations or who
have experienced decreased business
due to the COVID-19 pandemic,
collecting on accounts receivable is key.
During this time, business owners should shift
their focus from the profit and loss statement
to the balance sheet to maximize cash flows.
Business owners want to minimize inventory,
accounts payable and receivables. On the
receivable side, business owners should make
sure that they are getting the basics right. They
should make sure that they are sending out invoices
accurately on a timely basis and have a
policy in place to follow up if the invoices haven’t
been paid in 30 days. Perhaps to expedite
payment, business owners can offer discounting
solutions for customers who can pay more
quickly. Further, an aggressive and expensive
tactic would be to factor receivables for a quick
cash flow infusion. On the payable side, busi-
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