How do businesses navigate through the COVID-19 recovery?
1st Sep 2020
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As the cases of COVID-19 start to level out in most countries, lockdowns across the world have begun to ease. It also signifies the start of the long road to recovery. Picking up the pieces which COVID left behind, now is the best time for businesses to look at the state of their finances and strategise how to survive the months to come. Here is a checklist of things that you can do to keep the books balanced and make those important decisions:
Understanding your expenses allows you to manage your budget more effectively and put in cost-cutting measures where necessary. If you have not done so, draw up a list of all your expenses and sort them into three categories:
a. fixed expenses are recurring expenses that stay the same month to month. Key fixed expenses include rent, employee salaries, and any resource subscriptions;
b. variable expenses refer to overheads that help to cover your business needs the amounts of which may change month by month. Utilities, any business development costs and administrative supplies are some good examples of variable expenses; and
c. periodical expenses occur over a longer time frame (quarterly, annually). These include taxes, maintenance costs, regulatory fees and insurance premiums.
Looking back over the last 3 months of business expenses gives business owners an understanding of what the upcoming expenses might look like over the coming months for the short, medium and long term, and cut down on unnecessary spending.
Understanding which products and services bring in the bulk of the revenue will allow you to understand the operations better and visualise a future in which the business can thrive. Observe the competition and talk to fellow business owners to get a better sense of the market sentiment on the ground. Discuss and identify ways that can improve the cost to profit ratio.
Looking at cost and revenue will only give you an insight on how to balance the books. A good business owner needs to deep dive and analyse how COVID-19 has impacted the industry as a whole. Here are some tough questions you might want to consider:
How resilient is your business?
What changes can you make quickly for your business to adapt to the new norms?
Does your business have enough in the tank to see it through, tactically, the coming 6-9 months, and more strategically, the next 2 years?
Are there alternative sources of finance, which can help to tide your business over during these tough times?
Cash Flow Forecasting
Apart from planning what financial measures to take, you would eventually need to maintain a healthy cash flow to ensure the business activities continue to run smoothly. Key activities include:
a. negotiating relief on your bond, rent or loan;
b. identify what government subsidies are available; and
c. explore repayment schedules with your suppliers and any backers.
To navigate through the COVID-19 recovery, you need to be realistic in your approach to ensure your finances are shored up for the inclement times ahead. To keep track of everything, and to keep costs down whilst growing your business perhaps in a new way, may seem like a daunting task, and this is where Ordo can help.
Ordo is the only finance app that you will need to take care of the tracking of expenses, revenue and cashflow seamlessly. Be it secure payments, invoice tracking, notification of payments from clients, Ordo does the work for you without costing an arm and leg, allowing you the business owner to focus on the strategic side of things. In a tough time like this, business owners need all the help that they can get. Remember tough times don’t last, but tough people do!
Ordo removes hassle & headache from payments, making getting paid easy. Ordo means reduced costs, immediate money transfer, automatically reconciled payments, invoice security, and happy customers. We’re FCA authorised (FRN836070), invested in by Nationwide Building Society, the former Faster Payments leadership team & CGI partners.