Adviceforsmallbusinesseson waystoconservecashflow
THE farming, food and agribusiness professional services firm IFAC is offering advice to Wexford-based SMEs and business owners operating within the food and agribusiness sectors.
According to the organisation’s head of Food and Agribusiness, David Leydon, there are a number of measures business owners can take, with the aim of ensuring their enterprises remain viable as the country tries to deal with the impact of the coronavirus.
IFAC has over 30 offices around the country, including its office in Enniscorthy, located on Mill Park Road, and its Wicklow office, located at 3 Wentworth Place.
Mr Leydon said conserving cash flow is now a critical priority for many businesses.
‘ The coronavirus crisis is having a devastating impact on society and also across the economy, [and] leadership teams need to make decisions and act decisively,’ said Mr Leydon.
He highlighted how it’s the responsibility of every business to act now to slow down the spread of Covid-19.
‘Protecting your community and your staff is uppermost in everyone’s mind, however, the economic impact is being felt by businesses across the country.’
With that in mind, Mr Leydon outlined the following measures for business owners to take including the importance of speaking to their bank.
‘Not enough businesses are communicating with their bank. Inform them of your situation and how you see this crisis playing out for your business in the short term and put them on notice that you may need a loan holiday, increased overdraft facilities or that you may need increased invoice discounting.’
Businesses should also examine State supports that may help them, he said.
‘Unsecured SBCI loans of up to €500,000 are available and Enterprise Ireland has a range of supports available, including a Rescue and Restructuring Scheme for vulnerable but viable firms.’
Contacting Revenue is also vital, said Mr Leydon.
‘Keep your liabilities to Revenue under review and remember if you meet the criteria you will be able to enter into a phased payment arrangement in due course.’
He said businesses should increase cash inflow where possible and follow up on all debtors as a matter of priority.
Mr Leydon also outlined a number of ways for businesses to reduce spending, including: consider pausing any capital investment; cut all discretionary spending; ban travel even when the opportunity to travel re-emerges and use video conferencing tools as an alternative; where possible, lease rather than buy equipment; renegotiate payment terms with your suppliers; re-tender where possible; look for a rent reduction; get your staff to think of more ways to save the business cash; and reduce inventory – which will free up cash for the business.
‘Staffing decisions are the most difficult decisions for any business owner or manager,’ said Mr Leydon.
He added that where a business is under acute stress there are options that must be considered, including: reducing hours not salary and if salary cuts are necessary senior staff should cut their salaries first.
‘If you have to reduce staff numbers try and do it once and not have the constant threat of staff redundancies.’
Mr Leydon also said it’s vital that teams are informed of the various Department of Social Welfare supports available to employees.
Additionally, he said budgets created towards the end of the last financial year are now no longer fit for purpose.
‘A revised budget and cash flow with a new sales forecast are vital to helping you manage through this period.
‘Importantly, examine how much of the new forecast belongs to existing clients and how much of it relies on new client acquisition.’
Mr Leydon said that now is the time for effective leadership, while it’s also ‘crucial’ to best position the business for when the crisis passes.
‘ Taking clear and decisive action early to deal with this shock to your business is critical.’