“Cash Is King”, especially true during a crisis like today’s.
When MCO was introduced, the first thing every business owners did was …. stone for a moment, then start to check their company bank accounts and personal bank accounts to know how long can they survive with the cash they have in the banks. Well, it’s not wrong coz this is what everyone does in panic mode.
But the question now is, “what’s next?”
As a leader to your business, you don’t have time to panic. You need to stay calm and start strategising and plan ahead. Since cash-flow is the single most important element during a crisis, let’s look at what are the things that you can do and what you should be looking at.
1. Cash in Banks
- How long you can survive without the collection from sales neither the funding coming from shareholders? Remember to take into consideration of your fixed commitment that you cannot avoid, such as salaries, rental, loan instalments etc.
2. Account Receivables (Owing by customers)
- How much do your customers owe you, be it recent or long outstanding?
- How quickly can you get them to pay you, partially or fully (depending on how bad they are affected by this MCO)? Please take note that not all companies suffer during this MCO, go after those who are doing well during this period (such as Pharmaceutical, online business etc)
- Every dollars counts, do not just look at the big amounts, even collection of small sum during this period is important.
- Offer discount to get cash if it’s not due.
- Offer instalment payments instead of just allow them to drag your payment
- You can even consider factoring the bills to bank to get cash (only applicable if your customers are solid customers such as MNCs or PLCs
3. Account Payables (Owing to Suppliers)
- Negotiate with them for instalments (especially when they are supplying main materials for your production, example meat and vegetables for Restaurant etc)
- Go for small quantity purchase instead of buying in bulk to enjoy discounts (not worthy during this period, keep your cash)
4. Loans from Banks
- Go to the bank and work on refinancing if possible
- Can you just serve the interest for the next few months instead of paying instalment?
5. Stimulation Packages announced by Government
- Delay your bank instalment payment by 6 months
- Apply to the Micro financing Scheme (if applicable), with 2% interest, up to RM75,000 financing (administer by Bank Simpanan National)
- SMEs with business records of less than 4 years can also leverage the BizMula-i and BizWanita-i schemes for financing up to RM300,000 under the Credit Guarantee Malaysia Berhad (CGC).
- Others which are applicable depending in your industry
In times of crisis, do not simply decide on how to pay and when to pay, make sure you look into the impact to your sustainability and TIMING is the key.
Understand your numbers, pressure cook it and test how far you can go, DO NOT PANIC.