Pandemic Cash Flow Strategies Have Staying Power for Distributors
For most distributors, the disruption caused by the COVID-19 pandemic impacted the structure and security of their cash flow. Where before the pandemic they might’ve had room to be relaxed in monitoring the efficiency and viability of their inflows and outflows, disruption threatened to destabilize their cash reserves. A destabilized cash flow could quickly put a distributor out of business, or at the very least hurt their reputation with customers and suppliers.
Each company faced, and likely continues to face, a mixture of the following challenges:
Customers paying later than usual to maintain their own cash reserves
Vendors requesting payment sooner than usual to improve their own cash flows
Demand fluctuating in an unpredictable manner
Demand increasing or decreasing to a level the distributor could not support or sustain
Supply chain disruption impacting capacity to stock in-demand goods
Operations and logistics costs increasing due to pandemic conditions, such as fulfillment
Staff being limited due to social distancing and health concerns on-site
Any combination of these challenges impact cash flow. In response, distributors scrambled to identify their risks and resolve cash concerns before they became dire. Some had plans in place and responsible parties assigned, others did not. Measures were taken, like reducing salaries, staff and travel. In any case, distributors worked more diligently to put their cash flow under a microscope.
If you’ve been fighting fires to this point to keep your cash viable, closely analyzing your cash flow and making mindful adjustments, there is great benefit to continuing that practice even as the pandemic subsides.
It’s time to pull back, get a 360-degree view, and evaluate how you might stabilize your cash flow and prepare for a variety of future scenarios, and how you might gain more accurate visibility over money moving through your company and improve your forecasting capabilities so there’s a smaller chance you’ll be caught off guard in the future.
Read the entire article at EdieBailly: https://www.eidebailly.com/insights/articles/2021/5/pandemic-cash-flow-strategies-have-staying-power-for-distributors
