A financial expert has called on local businesses to focus on cash flow management in trying to stabilize their operations particularly when the coronavirus disease 2019 pandemic comes to pass.
During the first online general membership meeting of Davao City Chamber of Commerce and Industry, Inc. (DCCCII) last Tuesday, Protacio T. Tacandong, former DCCCII president and chief operating officer of the Reyes Tacandong & Co., said employers must be conscious enough in how they manage their coffers.
“All your employees, suppliers, customers, and creditors are depending (on) you to lead, not just emotionally but also prudently with respect to the long-term finances of the organization. Whatever you can do to Conserve cash is going to be critical, because that’́s what’s going to determine whether your employees are going to be paid next week,” said Tacandong.
Aside from managing cash flows, Tacandong cited other practical guidelines in ensuring better operations of businesses, including taking professional advice, managing cash inflows, access government-backed support, communicating with bank and finance providers, and updating cash flow forecasts.
He said managing cash flows must be based on practiced principles as he cited an article in the Chartered Accountants of England and Wales among those can be considered.
In his presentation,
Under managing cash flows, Tacandong said that raising awareness about the importance of cash is crucial. One must communicate regularly with business suppliers and pay their dues.
Among his personal suggestions are taking inventory of finances, prioritizing and identifying expenses, availing of deferral or grace period provided by financial institutions, schedule the release of employees’ incentives and bonus, help employees learn cost saving measures, and offering retirement to employees nearing retirement age to avail of tax deductions.
It is important as well to talk to professionals such as accountants and business advisors, and seek their guidance especially during this time of crisis where there are rising queries in businesses and taxes.
To manage cash inflows, one must adjust to the needs of the customers by communicating with them especially to the key or major customers. Arrangements must also be made to collect new sales on delivery and seek to collect from paying customers.
He personally suggested to review account receivables especially past due accounts and collect them if possible, arrange for cash-on-delivery (COD) or collect before delivery (CBD) sales, and take suggestions from employees on how to enhance revenue and facilitate or expedite collections.
Businesspeople should also access the government back support such as extension of income and other taxes, and avail other government support or programs that will help them especially during this time of crisis.
Communicating with financial institutions is also crucial especially in requesting for moratorium or deferral on interest and principal. It is suggested to request or negotiate to reduce interest rates.
It is also important to review and update the cash flow forecast “for key assumptions used, including the effect of anticipated lower sales or delayed collections or bad debts, on your cash position.”
Tacandong emphasized the importance of technology since in the new normal there are less physical interactions when conducting businesses. Work-from-home setting or virtual offices will also become part of the new norm.
He also offers services from RT&Co DigIT, Inc. and RT&Co Outsource Services, Inc. that would help the business industry adjust during the new normal setting.
