Tips for Conserving Cash During the COVID-19 Crisis

Tips for Conserving Cash During the COVID-19 Crisis
Small- and medium-sized businesses have a lot of things on their plates right now. Thanks to the COVID-19 crisis,
business as we normally know it has come to a standstill. This has created a slew of challenges that companies of all
sizes face. Of particular concern to smaller businesses is cash flow.
A company's cash flow represents its ability to conduct business on a day-to-day basis. Without cash flow, the lights go
out and employees do not get paid. The dark side of the COVID-19 crisis in relation to cash flow is that it will continue to
put pressure on businesses even after the economy is reopened. Some small- and medium-sized businesses could
struggle with cash flow problems through the end of the year.
Business Loans and Grants
Both Washington and the states are anticipating long-term cash flow problems for smaller businesses. Recent legislation
is meant to address some of those problems. For example, the CARES Act passed in March provides cash flow relief to
companies requesting small business loans so they can cover payroll. Some of these loans are forgivable as well.
Business owners can also look at:
Direct Injury Loans – Businesses can apply for loans to address problems directly caused by the crisis. Loans of
up to $2 million can be used to cover accounts payable, fixed debts, etc.
State Loans – Although not every state is offering loan and grant relief, some are. It is up to business owners to
check with the appropriate state agencies to learn what is available.
Note that there is no telling how long business loans and grants will be made available. At some point, programs are
likely to run out of cash.

Deffering Payroll Taxes
Smaller businesses can better manage cash flow by differing payroll tax deposits for the remainder of 2020. Those
choosing to do so will be expected to make those deposits over the next two years. Half must be paid by the end of 2021
while the remainder can be deferred until the end of 2022. Depending on the size of your company, deferring could
preserve off a lot of cash.
Reducing Company Perks
Though not ideal, companies may have to cut some employee perks in order to protect cash flow. These are extras
provided above and beyond employee benefits. We are talking things like paid lunches, paid public transportation, and
so forth.
Reducing Utility Usage
Some small- and medium-sized companies might be spending money unnecessarily on utilities. Think about turning off
the lights when people are not around. Shut down unused computer terminals and office equipment. Adjust
thermostats so that you are not heating or cooling unused space. Even though saving on utilities doesn't seem like
much, every dollar saved is another dollar toward positive cash flow.
Deferring Rental Payments
We have heard stories of property owners allowing their tenants to defer rental payments for a couple of months. That
is an honorable thing to do and something that should be commended. From the business side of things, deferring rental
payments could free up a significant amount of cash that could be put towards other expenses. The only downside to
rental deferral is the fact that past due amounts will still have to be paid. That means spending cash at a later date.
Preserving cash is a normal practice during times of economic downturn. What we are experiencing now, as a result of
COVID-19, is causing serious cash flow problems for small- and medium-sized businesses. Thus, cash flow has become a
priority. Hopefully, the crisis will not last as long as some are predicting.