Episode Synopsis "Building Liquidity In Your Business To Survive"

For SMEs more so than anyone “cash is king”. In these tough times it is ever more important that as a business leader you take inventory of what you got. Your liquidity is more relevant than before, right now if you had investments as reserves in stocks/bonds/mutual-funds/real-estate these might not become so functional to rescue you since it is a buyers market right now. But if you have cash reserves at hand then you might traverse the waves with some ease. On average an SME has a cash-reserve that can last merely 2.7 months. If you have anything around 6 months, you have time to think, kudos! If you do not, then follow these steps:* Take inventory: of your receivables, identify payments that are on-time and those which could be delayed, also assess your long-term receivables.* Track inflow-payments every-day: Those payments that have even a slight chance of being delayed (do not rely on your finance team to recover them, everybody is in the same waters, it is time for executive intervention) reach out to those clients of yours yourself and make a case for on-time payment.* Discount long-term pending payments: Any cash is better than no cash, so reach out to the long-term receivable list and create incentive for payments. Discounted payment, cash-against future work or anything-they-can-do-right-now.* Layout future inflow: Now, discount all future inflow based on risk associated with variability. If historically you have not been having consistent inflow (you will not have consistent inflow this time either, period!) See the upper and lower cap of revenue/cash variability, run both cases, see where you end up! See the minimum revenue you need to run the company as is (against cash in flow not revenues, revenues are irrelevant if they do not bring in cash). Add your variability factor to the number and hand it out to your sales team.See you in the next weekly sprint. I would love to hear how you did this week, also do leave your feedback and comment, it will help me tailor the content so it serves you better.If you found this useful please subscribe to weekly sprints that will help you grow your business. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit growthsprints.substack.com

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• Building Liquidity In Your Business To Survive