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Minimizing cash flow gaps during a pandemic

The Federal Reserve Bank of New York found in their 2019 Small Business Credit Survey that only one in five healthy small businesses had enough cash to continue normal operations with a two-month revenue loss. Social distancing and quarantine orders went into effect in mid-March. Now, in mid-May, the considerable economic implications of the COVID-19 pandemic are extremely apparent.

Small businesses need cash. The Small Business Administration's (SBA) Paycheck Protection Program ran out of the initial US $350 billion in only 13 days. We've shared five tips for small businesses to remain cash flow positive but Kivanc Onan, Head of Payments and Financial Products Strategy of North America B2B at, gathered three additional suggestions to help small businesses manage their cash flow:

  1. Create a cash flow forecast for the first day you are back in business
    Most businesses will continue to face cash flow challenges even after re-opening. That's why it is essential to plan how much cash and credit you currently need and will need to re-open. Consider what expenses can be cut, what receivables can be renegotiated, what you actually require right now. Create a comprehensive cash flow plan by taking into account your company's anticipated needs in the short and long term and assessing how much your business has been affected. Planning ahead will help you better navigate the economic phases as the pandemic develops.

  2. If you need credit, turn to suppliers
    Federal funding is limited and alternate sources of credit have many pros and cons. Consider turning to your suppliers for additional credit instead. Suppliers have a financial stake in your business. They may be more flexible and extend credit with favorable terms. It will likely be the most affordable option as well. Bear in mind — suppliers are vulnerable right now too. Don't take advantage of their kindness. Rather, join together and strengthen your relationship.

  3. Do not use personal credit cards for your business needs
    Many small business owners rely on personal credit cards for a variety of reasons — earning points, cash back, rewards — but be careful to carry a zero or manageable balance. Credit card financing charges can rapidly increase and you could dig yourself into a deeper hole before you know it.

The pandemic has put a strain on cash flow across the value chain. The businesses who rationalize their cash flow now will be best poised for success as the pandemic evolves.

You can read more from Kivanc in his PaymentsJournal and The Paypers articles.

Watch our fireside chat with Kivanc Onan, Head of Payments and Financial Products Strategy of North America B2B at, and Elizabeth Gore, President of Hello Alice, as they share potential cash flow sources for small businesses. You can view some of our other fireside chats here.

This week's #B2BTuesday Tip:

Making your payments on the same day might be easy to remember but is terrible for cash management. Spread out your expenses to avoid making all of you payments at once.

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