how-to-effectively-manage-working-capital-during-crisis

Also Read:Working Capital Loans: What, How, and Where?
 

• Examine capital investment plan: The fluctuations in the cash flow during the times of crisis require changes in long-term capital investment plan. You need to revisit your expansion plans in the light of this uncertain scenario. A company needs to assess what is absolutely essential and what can be put on hold. Furthermore, organizations need to know what investments are required for creating a competitive advantage when the situation return to normal.
• Make an inventory audit: In the times of uncertainty, organizations are at risk of experiencing problems like shortages of raw material and other parts. Therefore, making a thorough audit of the inventory will provide youa fair idea aboutthe supply of stocks. In that case, it is crucial to create a strategy that will help sell the products, especially the perishable ones, quickly in the market to avoid waste andgenerate cash flow.

 
Also Read: For MSMEs, Working Capital Loans Are The Road To Recovery
 

• Improve receivable process: Depending on the situation, organizations may need to come up with fresh ideas to generate faster cash flow from their receivables. For example, companies can reassess the invoicing process to remove inefficiencies that may be delaying the sending of invoices to the debtors. They can speed up the process by using latest technology.
• Explore new market: Businesses also need to discover potential markets if the existing ones are adversely affected during the crisis.For example, a company can diversify its strategy with the available pool of labour and fixed assets to cater to the demand of the customers.
• Select vendors who offer value for money: In times of crisis, see that your vendors offer you attractive discounts. And if that is not feasible, then look for vendors who can offer considerable advantage on extending the deadline for making payments and offer good deal for long-term contracts.
• Scout alternative financing options: A company needs to explore new sources of finance to ensure steady flow of working capital in the times of uncertainty. Rather than depending on the traditional sources of financing, the companies can evaluate new sources of raising funds like asset-based lenders, peer-to-peer lending and retail bonds.

Also Read: 6 strategies to Keep Your Business Afloat during Covid-19
 
To conclude
Every organization, big or small, need to adopt effective working capital management strategy to chart a sustainable growth path. Strengthening the cash flow is the need of the hour to survive and withstand the crisis period.
 

Also Read:Working Capital Loans: What, How, and Where?
 

• Examine capital investment plan: The fluctuations in the cash flow during the times of crisis require changes in long-term capital investment plan. You need to revisit your expansion plans in the light of this uncertain scenario. A company needs to assess what is absolutely essential and what can be put on hold. Furthermore, organizations need to know what investments are required for creating a competitive advantage when the situation return to normal.
• Make an inventory audit: In the times of uncertainty, organizations are at risk of experiencing problems like shortages of raw material and other parts. Therefore, making a thorough audit of the inventory will provide youa fair idea aboutthe supply of stocks. In that case, it is crucial to create a strategy that will help sell the products, especially the perishable ones, quickly in the market to avoid waste andgenerate cash flow.

 
Also Read: For MSMEs, Working Capital Loans Are The Road To Recovery
 

• Improve receivable process: Depending on the situation, organizations may need to come up with fresh ideas to generate faster cash flow from their receivables. For example, companies can reassess the invoicing process to remove inefficiencies that may be delaying the sending of invoices to the debtors. They can speed up the process by using latest technology.
• Explore new market: Businesses also need to discover potential markets if the existing ones are adversely affected during the crisis.For example, a company can diversify its strategy with the available pool of labour and fixed assets to cater to the demand of the customers.
• Select vendors who offer value for money: In times of crisis, see that your vendors offer you attractive discounts. And if that is not feasible, then look for vendors who can offer considerable advantage on extending the deadline for making payments and offer good deal for long-term contracts.
• Scout alternative financing options: A company needs to explore new sources of finance to ensure steady flow of working capital in the times of uncertainty. Rather than depending on the traditional sources of financing, the companies can evaluate new sources of raising funds like asset-based lenders, peer-to-peer lending and retail bonds.

To conclude
Every organization, big or small, need to adopt effective working capital management strategy to chart a sustainable growth path. Strengthening the cash flow is the need of the hour to survive and withstand the crisis period.