5 Ways Finance Departments Can Protect Themselves in Challenging Times

During a crisis, it’s not unusual for finance departments to take on the critical responsibility of managing cash pressures. As Esker’s Director of Finance and Administration, I’ve spent the last two months closely monitoring our cash balance and scrutinizing our payables. In addition, I’m keeping a watchful eye on the daily updates (both state and federal) regarding the status of the virus and economy.

Managing this type of change and difficulty can feel overwhelming — particularly when our return to normal is still so ill-defined — yet organisations have to do all they can to stay up and running. Here are five tips for finance departments to protect themselves during this challenging time:

  1. Don’t underestimate the importance of cash.
    As a business, having and maintaining a strong balance sheet is more important than ever. If you have a line of credit with a bank, draw on it and sit on the cash. If you don’t need it, great, but banks can easily lower that limit and you may not have access to the cash when you need it most. 
  2. Conduct a serious review of all expenses.
    Now that we have two-month case study of what it’s like to operate a business in the midst of a global pandemic, it’s an opportunity review all costs and determine what, if any, can be either delayed or eliminated. Rethink how you will operate going forward. For example, now that you have worked remotely, how can this be leveraged in the future? Is as much travel needed? Is as much office space needed? All of these are legitimate questions that can aid in your organisation’s success going forward.
  3. Consider adopting an automation solution. Even in today’s digital world, the core transactional processes within many finance departments still rely on employees performing manual tasks. Obviously, in situations where working from home isn’t possible, automated solutions are an attractive and viable option. As Michael Heric, Partner & Bain & Company put it in a recent Wall Street Journal article: “If you can’t send a bill to a customer or you can’t send a check to an employee, all of those operations basically halt. You’ll struggle to close the books if there’s a lot of manual things that are going on.”
  4. Take advantage of government programs. 
    If applicable, consider applying for the Payroll Protection Program (PPP), which expands which organisations are eligible for Small Business Administration (SBA) loans. The PPP just got a second round of funding in late April and offers small businesses access to a forgivable loan to pay their employees over the course of eight weeks. Also, if your business has a current SBA loan, the option of delaying payroll tax payment should be an option. Lastly, check out the new Main Street New Loan Facility program, unveiled in April, in which the Federal Reserve purchases loans that banks give to small and mid-size businesses.
  5. Work closely with customers and vendors.
    When it comes to customers, be sure to get invoices out as quickly and accurately as possible. This is the most effective way to not give them any legitimate reason for a delayed payment. It’s also a good idea to actively work on converting customers to electronic payment so you don’t have to rely on a physical check being printed/mailed. For vendors, depending on your cash position, check to see if they will accept longer payment terms or an early payment discount.

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