We’re continuing our series about continuing to grow during a downtown today. But, actually, sometimes you might not be able to do very much growing. You may have to just focus on sustaining yourself, which means preserving cash. Of course it’s better to grow, but maintaining the status quo before figuring out exactly what you’re going to do is sometimes necessary.
Recent data in February 2023 about credit card debt tells us that people have likely been having trouble for a decent amount of time. With this data in mind, businesses should prepare for spending to slow down. Unlike some consumers, businesses should be more proactive so that they don’t find themselves in a panic.
One thing you can make adjustments to is your accounts receivable by seeing if there’s anything you can do to collect sooner. This is one of many reasons why relationships with your customers are so important. If they only have a limited amount of cash, they’re more likely to pay the people they have the strongest relationships with first.
Accounts payable is an area that many businesses overlook as a way to get cash to get through a short-term challenge. You may be able to delay paying longer than normal. Remember, AR and AP are a balancing act, and you can still be ethical while doing this.
Having genuine dialogue with your vendors and stakeholders about how everyone can still continue doing business is crucial. Just because we’re in difficult times doesn’t mean that your morality should change. Be open and honest so that you can help each other.
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