If you regularly bill clients, you have likely had the experience of chasing down money. It's frustrating, uncomfortable and a little intimidating. Now add in a global pandemic, climbing unemployment statistics and the amount of small businesses closing shop and suddenly, asking for what's owed to you can be downright worrisome. Let's take a step back and consider a new way of dealing with outstanding or overdue invoices, shall we?
Employers and organizations are beginning to move into a new normal after the COVID-19 pandemic response affected their businesses. With lockdown orders lifted and the phased approach to reopening, business owners and executives are seeking out ways to ramp up business quickly and keep their employees safe. Many companies furloughed or laid off staff and will be running at reduced staff levels for a period of time.
Retaining clients and customers is important for any business at any time. During times of uncertainty, it can be especially challenging. Clients may be unwilling or unable to commit due to financial concerns. You can still make efforts to keep these customers by changing how you work with them.
Cash flow is critical to any business, no matter its size. With poor cash flow management, even a profitable business can end up in bankruptcy. If the amount of cash coming in is less than what's being spent, businesses are unable to make investments or will need to borrow money to stay afloat.
This week, LinkedIn published a piece from their Workforce Confidence Index sharing that freelancers "reported lower confidence in their financial stability than the unemployed." As if we're not all inundated with enough bad news, there's no need to state the obvious. Most of us are shaken and concerned right now as nearly any business is affected by the pandemic. Even more interesting were the comments on the article from freelancers and entrepreneurs sharing their view of this crisis as an opportunity.
When the Small Business Administration announced a forgivable loan program in response to the COVID-19 pandemic, small businesses and independent contractors rejoiced. The only requirements to qualify for the Paycheck Protection Program loan are fewer than 500 employees and to have been in business by February 15, 2020. If your growing business is economically affected or you're a freelancer who has lost clients due to the pandemic, this program was made to help.
When the Cheesecake Factory and other retailers have announced that they will not pay rent, it can give pause to small and growing businesses who need their invoices paid. During such an unprecedented time, most everyone is feeling the panic and stress about potential loss of cash flow. It doesn't seem like a good time to ask for payment from clients or customers who may be facing their own crises.
For freelancers, startups and small business owners, the COVID-19 pandemic likely has impacted daily life and your business. Startup funding is drying up, employees are being furloughed or in general, we're all living in a state of uncertainty. You may be wondering if there's anything that you can do that could save your business during a crisis.
Our advice - Don't Panic! You may be better off than you thought.
During an economic downturn, it is not uncommon for accounting departments to notice an increase in DSO (Days Sales Outstanding). As receivables start to drift beyond payment terms, you’ll want to be sure your team is ready to act fast. Depending on the circumstances, the accounts receivable response may be varied from demand letters to payment plans.
Whether you're a freelancer, small business owner or employee, working from home can be quite an adjustment. It's easy to get distracted by laundry or other household to-do's and you're probably reading this because you know that already. With a couple of tweaks to your routine, you may find that you're more productive working from home than the office.
