Managing cash flow during a crisis and beyond

Managing cash flow during a crisis and beyond

By Kyle Meissner, CPA
Cordell, Neher & Company, PLLC

Your cash flow is the financial story of your business. It tells the story of your high points and low points, when and where the money comes in and goes out, and is the lifeline of your business in times of crisis. Proper cash flow management can mean the difference between survival and going under for small businesses especially in periods of market and economic downturn, such current challenges posed by the fallout of the COVID-19 Pandemic.

Here are seven steps to managing your cash flow during a crisis.


  1. Update and understand your financial statements: The key to managing your cash flow is operating from current financial statements. As a first step, ask your CPA to provide you with an up-to-date look at your business’s financial picture and discuss the statement together. Your CPA can help you identify areas of opportunity and challenge to ensure you’re proactively optimizing your business’s financial situation no matter the economic situation.
  1. Understand your fixed and variable expenses: Hand-in-hand with updated financial statements you need to have an understanding of fixed and variable expenses. Sorting your expenses into these two buckets will help you to see where you have expenses you can cut temporarily or permanently to save cash, or where you can negotiate to improve your cash flow in times of need.
  1. Know your credit options: Next, contact your banking professional to understand your available credit options. In times of crisis, the likelihood of needing to dip into lines of credit increases, and you need to know what’s available to you, the terms, and have a plan for repaying it when the dust settles. This will help you project your cash flow as you begin to model scenarios through a challenging period.
  1. Project your cash flow: Your first cash flow projection should be conducted using your current levels of income, expenses, and lines of credit so you can get a clear look at where you stand without change. Additionally, you will want to look back at least five years to see how your financial picture has fluctuated in the context of times of growth and downturn. Then, as you project forward into the future, break down your cash flow at micro increments, weekly or biweekly, to see where and when your cash reserves and credit lines may begin to run out. This can help you predict when and where you will need to make changes internally.
  1. Increase cash collections: Once you’ve projected your cash flow out, look at ways you can increase cash coming into your business.
    • Accounts receivable: You don’t have to be facing a period of crisis to start to clean up your accounts receivable (AR). Improving your AR collections timeline is essential to improving cash flow. Work with your customers to set up payment plans that make sense and adjust your AR policies where needed. Are you offering more time than necessary to pay-in-full? Are you following up with late payments? Are you offering multiple methods of payment? Now may be the time to start considering credit cards if you aren’t currently accepting them.
    • Pivot your products/services: The COVID-19 pandemic is forcing many small businesses to pivot their offerings. Restaurants are offering delivery and takeaway, and grocery stores are offering personal shoppers as a couple of examples. As you look around, you’ll see small businesses across the country changing up the way they offer products and services to meet the needs of their customers. How can you pivot while staying true to your strengths?
    • Offer gift cards/certificates: If you’re not already offering gift cards/certificates, this may be a good option to start if your services warrant it. Make it as easy as possible for customers to purchase these over the phone or online so you can start to realize some cash now. Remember to adjust your cash flow projection to account for customers using these gift cards in future periods.
  1. Decrease expenses: Decreasing expenses is a natural place to start to try improving cash flow during a crisis, but it must be done carefully to maintain relationships with customers, vendors, and employees. Consider your fixed and variable expenses and what can be reduced or cut. Adjusting your utilities at the office if you’re working from home, implementing hiring freezes if you’re unsure about the future, and redistributing contract work to employees are just a few ways to decrease expenses. Additionally, consider:
    • Negotiating contracts: Work with your suppliers to understand your options for delaying payments, keeping in mind that they have expenses to meet as well. Approach negotiating contracts carefully as you do not want to damage important relationships.
    • Cutting payroll as a last resort: Before you implement lay-offs or furloughs, consider moving employees around the company to meet other needs, or offer work-from-home when possible. If you must make lay-offs or furloughs, ensure they meet department of labor guidelines.
  2. Rerun your cash flow model with different scenarios: Considering your options for increases in income and expenses, model your cash flow using various rates of change in those areas. Use realistic numbers to see how much of an improvement you can expect by making these adjustments over time.

Times of crisis can force small businesses to take a long hard look at their financial picture and address cash flow issues that may have been lingering long before the major event. By monitoring up-to-date financial statements and performing cash flow projections, you can become a better steward of your business’s finances in times of crisis and times of opportunity.

At Cordell, Neher & Company, we work with hundreds of businesses ranging in size from small sole proprietorships to large corporations. Our focus remains the same- helping each business on their path to success. The professionals in our office can help you review your operations and planning during this difficult time and make suggestions for stability and even growth. Give our office a call at (509) 663-1661 today to discuss your options.


Events & Deadlines

Latest Past Events

2024 Shred Event

Cordell Neher & Company, PLLC 175 E Penny Rd #1, Wenatchee

CNC Newsletter

Subscribe and stay informed on policy changes that could have an impact on you.
Something went wrong. Please check your entries and try again.

TaxCaddy Login

Avantax Login


CPA/Tax Documents Only

Footer Contact

  • This field is for validation purposes and should be left unchanged.

(509) 663-1661  - Wenatchee
(800) 767-7725  - Toll Free

(509) 662-5678
Fax Number

P.O. Box 3068
Wenatchee, WA 98807-3068

Check the background of your financial professional on FINRA's BrokerCheck®

Privacy & Usage: The information on the Cordell, Neher & Company, PLLC website is provided with the understanding that it should not be substituted, in any way, for consultation with a professional Certified Public Accountant, accountant, tax, legal or other competent advisor. Cordell, Neher & Company, PLLC makes every attempt to ensure that the information contained on their websites are obtained from reliable sources, but is not responsible for any errors and/or omissions or from the results obtained from the use of any information. This site contains links to servers maintained by other organizations. Cordell, Neher & Company, PLLC cannot provide any warranty regarding the accuracy or source of information found on any of these servers, the content of any file the user might use to download from a third-party site, and is not responsibility for the content found on any of these servers or for any links these servers maintain with other servers.

Avantax affiliated advisors may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory ServicesSM,Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100 Dallas, TX 75019 972-870-6000.

Avantax financial professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services.SM, Member FINRA, SIPC. Investment Advisory Services offered through Avantax Advisory Services SM. Insurance services offered through an Avantax affiliated insurance agency. Method 10® is property of Avantax Wealth Management.SM All rights reserved 2020. The Avantax family of companies exclusively provide investment products and services through its representatives. Although Avantax Wealth Management does not provide tax or legal advice, or supervise tax, accounting or legal services, Avantax representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth ManagementSM does not provide or supervise tax or accounting services, Avantax Representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth ManagementSM or its subsidiaries. Avantax Wealth ManagementSM is not responsible for and does not control, adopt, or endorse any content contained on any third party website.

This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Investments & Insurance Products: Are not insured by the FDIC or any federal government agency- Are not deposits of or guaranteed by the bank or any bank affiliate- May lose Value

Avantax Investment ServicesSM and Avantax Advisory ServicesSM are not affiliated with CNC Financial Group, LLC.


© 2024 Cordell, Neher & Company PLLC • Designed by Pixel to Press