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Understand the Cash Coming in and Going Out of Your Business
Cash is the most important KPI you have right now. Normally you wouldn’t need to track the cash that comes in and out of your accounts each day, but during these times, you need to be laser-focused on it. And it extends beyond merely the cash coming into your account. Revenue is going to slow down, so you must ensure you know how your cash level ebbs and flows.
Reach Out to Your Clients About Payment Timing
Just because you send an invoice to a client doesn’t mean they’ll have the ability to pay. Now is the time to reach out to clients, especially larger accounts that bring in a majority of your accounts receivable, to make sure you’re in agreement on the timing of their payments.
Look Ahead at Revenue Through Forecasting
Being proactive during this time is critical to your recovery. Forecasting, budgeting, and looking at different scenarios is a must. What happens if you lose 10% of your revenue versus 30%? How is your response different for one versus the other? You do not want to operate in reactive mode. Forecast ahead to make sure you are looking at all potential scenarios before they happen.
Many MSPs only have a month of cash reserves on hand, making it vital to have a crystal-clear understanding of their company’s financial operations. Determine your cash burn rate, gain visibility into your finances, and cut expenses to build resilience.
Peter Melby, CEO, Greystone Technology