Interest rates continue to rise, and inflation is still relatively high, while the cost of supplies and services aren’t steady. All this amounts to higher costs for not only consumers, but also business owners. While the economic landscape might seem uncertain, now is not the time for business owners to take a ‘wait and see’ approach. Instead, businesses must prepare themselves to navigate the changing economic landscape and set themselves up to excel.
While navigating this uncertain time can seem daunting, thankfully you don’t have to do it alone. You should look to business partners like your CPA, banker, and others to help you ensure your business can weather any economic changes and come out stronger on the other side.
Here are a few considerations and areas to discuss with your banking partner.
Evaluate Your Cash Flow
First, business owners must evaluate their cash flow. Forecasting is a good idea for budgeting, but the process could help you uncover any uncollected or unpaid invoices. Create a habit of consistently checking your forecast – at least monthly– to help plan for the unexpected and make the right financial decisions. It’s important to know your interest rates, your lines of credit, the amount you are spending and what you are saving. Did you know that your bank may provide services that make accounts payable and receivable more streamlined, cost effective and better protected against fraud? Processing checks is expensive and has the potential for errors and a higher risk of fraud. There are solutions that help solve these concerns in one streamlined resource.
Check Your Supply Chain and Receivables
Another way to decrease costs to offset increases in other operational areas is by reviewing your supply chain. Business owners should look for ways to save on production and supplies – whether that’s through less expensive alternatives, streamlining operations, or through technology. If automating your supply chain or seeking alternatives isn’t an option, consider renegotiating the terms of your current contracts.
The payment collection process has also proven to be cumbersome — after payment is received from a partner, it can often take an in-person trip to the bank and numerous days before the funds are available. Looks for solutions where you can accept payments from anywhere. These solutions allow you to deposit checks anytime, anywhere, giving you access to funds sooner and helping you keep track of cleared checks.
Test Your Emergency Plan
Now is a good time to reassess your emergency plan. Ask yourself if your business is set up to withstand various scenarios and run through what would happen in case of each. Examples include: What if consumer spending changes? Can you cover your loan obligations? Are your savings in the right business account to capitalize on rates? How long can you maintain a full staff? It is best to think through potential solutions ahead of time. Talk to your banker about what options are available to you including merchant services, hedging, credit and investment sweeps, or financing new equipment to grow your business for the long term. If your bank isn’t willing to lend, look for local banks that know your region and industry and are willing to find different solutions to help you achieve your goals.
This changing financial landscape can be confusing and concerning, but there’s no reason to navigate it alone. Use your resources available, like your banker and accountant, to identify ways to enhance your expense management practices. Your partners can help you understand the options available to you based on your business and your needs, and help you make decisions that will keep your company thriving today and help you reach your future goals.
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