Now more than ever, it’s important to effectively manage your company's cash flow.

3 Min Read
Challenging business environment
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Now more than ever, it’s important to effectively manage your company’s cash flow. Just about every partner I’ve talked to over the past few months has said their cash flow has been interrupted in this challenging business environment, and here’s the advice I’ve given them:

Cash flow planning — Understanding where your cash flow stands right now is critical. Ask yourself the following questions:

  • Can you survive an interruption in payments from your customers?

  • Do you have the liquidity to pay your bills if payments to you are disrupted?

  • How are your customers paying you today?

  • Are they taking longer than normal?

  • Has their cash flow been impacted or will it be?

  • Can you get extended terms from your suppliers?

  • Have you asked your landlord if you can delay the payment of rent?

Model your cash flow projections, consider what you’d do under several scenarios, and see if you could access funding if necessary.

Work proactively with your senior lender to ensure they’d grant collateral flexibility. Collateral has a tremendous impact for many of our partners where their asset-based lines of credit are essential to their viability. The key is to negotiate less ineligible AR and fuel new collateral by driving the business.

Don’t overlook routine back-office activities such as turning receivables into cash and managing payables, which can often be taken for granted. Shifting focus from the income statement to the balance sheet is imperative in this current business environment. That doesn’t mean shifting focus away from income-generating activities, but rather on maintaining a healthy balance sheet and addressing areas to improve cash flow. Maintaining best-in-class business practices will be critical as you work toward getting business back to normal.

Manage your soft costs — Start out by getting a handle on your fixed costs, such as rent and depreciation on furniture. Trimming variable costs such as travel and entertainment should be top on your list given the current social distancing.

Manage hiring, cut temporary employees where it’s feasible, and transition their workload to your permanent staff if possible. Encourage full-time employees to take vacation, if you’ve established a cash reserve, as this will reduce payroll expenses.

Optimize your IT landscape–Take cost out of the business by taking a critical inventory of software and hardware for obsolete or underutilized products. Eliminating software sprawl will save on maintenance, renewal costs and eliminate the need for underused supporting hardware systems. Ingram Micro Business Intelligence, CITE delivers powerful data-driven insights to enable you to pivot IT resources to the cloud, consolidate costs, embrace annuity-based billing, avoid traditional refresh cycles and operate a more agile and cash rich business.

Look at financing to get yourself paid faster — Leverage Ingram Micro’s or a financing company’s balance sheet—not your own. Cash is king, and, in most cases, is the key to winning deals in this challenging business environment. In most cases, a financing company will pay you upfront and provide the customer with extended payment terms. Your credit representative at Ingram Micro will recommend the best financing available to close the deal and get you paid faster.

In closing, look to us for support to win business and ensure a healthy cash flow in this challenging business environment—and please don’t hesitate to reach out to your Ingram Micro account manager and ask how we can support you.

Anthony Mackle is Senior Vice President and Chief Financial Officer, U.S. and Latin America, at Ingram Micro.

This guest blog is part of a Channel Futures sponsorship.

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