In a crisis situation, you need to do a careful evaluation of cash flow, in the form of incoming and outgoing. Basically, every movement of business performance, whether operating, investing, or funding a company in a certain period will affect changes in these components. When the incoming cash flow is greater than the outflow, it will show positive cash flow, on the contrary when there is less incoming cash than the cash outflow, then what happens is negative cash flow. Meanwhile, if you need professional bookkeepers or accountants to help your company during a crisis, we highly recommend Richard Darcy Gold Coast Bookkeepers.
Basically, evaluating cash flow statements is useful for knowing cash and cash equivalents receipts and disbursements so that you can analyze your ability to generate net cash flow in the future.
In times of crisis, companies are certainly vulnerable to their ability to meet obligations. Therefore, a careful cash flow evaluation is needed so that you can assess the company’s ability to meet debt service obligations and show conditions when requiring outside funding.
In this case, you need to look at the flow of corporate financial funds in the form of short-term turnover or long-term turnover. In short-term cash flows, the circulation of funds only occurs in current assets.
Meanwhile, in the long-term cash flow rotation, funds are spent on fixed assets or investments that will become cash when there is depreciation when selling finished goods. Returns in cash on fixed assets last longer because there is a depreciation accompanied by company profits.
When economic conditions are uncertain, arranging a timeline for submitting invoices or invoices on time is the most logical step. The reason is, the faster the accounts receivable revolves, the more capital that can be used to develop the business. Submission of invoices early can also be done by using an online accounting software program.
With the help of software technology, you can automatically classify the age of accounts receivable. This method allows you to act immediately if there are bills that are past due.
In a crisis, it is quite possible that the debt holder is having difficulty making payments to your company. Another solution that can be done so that cash flow is smooth is to consider payment of debt installments.