Surviving Cash Flow Interruption in Times of Crisis

COVID-19 is wreaking havoc across the world. Not only are there severe health consequences from the virus’ spread, but the business world is facing near-unprecedented disruption. Cities have already instituted “shelter in place” orders and others have called for the temporary closure of bars, cinemas, and other non-essential businesses. Even pro sports leagues are on hiatus for now. Besides the obvious health and safety implications, economic and human resources challenges will make the next few months (at the very least) extremely difficult for businesses. In fact, a stunning 18% of U.S. workers have already lost jobs or had their hours cut due to COVID-19, quickly evoking feelings that a recession is looming. With the effects of the pandemic so far-reaching and with no end in sight, no business sector will be spared from some kind of impact. In the meantime, business owners need to make payroll, pay rent, and manage their working capital. Many of these costs are fixed, meaning that these businesses are going to face a tremendous amount of pressure for the foreseeable future.

"Do you remember the 2008 Global Financial Crisis? Manufacturers such as the auto industry were forced to extend supplier payments. The average cash conversion cycle spiked, and the effect rippled throughout the entire economy. We can expect the same to happen now. Regardless of the industry, you, your suppliers, and your customers are going to be looking for flexibility, which can make working capital management even tougher."

As a financial executive you know that managing cash is critical in normal times and even more critical when facing a sweeping crisis like COVID-19. Businesses that are being significantly hampered by COVID-19 may find it more difficult to manage their AP processes. Reduced in-person staff availability makes it all but impossible to track invoices and submit on-time payments, especially as this crisis worsens. This will be exacerbated by suppliers’ pressure to be paid faster to “keep the lights on”.

A digital account payable (“AP”) payments solution can relieve some of the pressure on cash management that so many businesses and their executives will experience in the months and even years ahead. A digital approach allows the supplier to get paid in a timelier manner — in the way they need, while giving your business a better way to handle payments, future audits, and tap into the benefits of cutting costs and even receiving rebates on some transactions. Instead of needing to go to the office to review a payment or handle a supplier inquiry, you and your colleagues can do so from while working remotely so that your business doesn’t have to sacrifice efficiency for safety. Whether your team is working from home due to COVID-19 or is back in the office, your team can stay on top of your payment obligations, manage your supplier relationships, and ultimately mitigate your risk throughout this and future crises.

While crises can be extremely scary, there is a silver lining. Often, there is a significant amount of innovation that comes from it, as individuals and businesses think creatively to solve difficult problems. Taking advantage of an AP payments solution during this unprecedented global crisis can go a long way in helping you emerge on the other side even stronger. Finexio can help assess your current processes and recommend a solution that fits your business now and in the future. Click here to speak with a member of our team. Stay safe!

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