It has been just over two years since coronavirus made it to our shores. We had a rough 18 months before the national recovery started in earnest. The good news is that the economy has recovered nearly completely from COVID. The bad news is that we now appear to be headed for recession. Fears of a recession may have you and your management team wondering how you are going to navigate the current business climate.
First of all, don’t panic. We have all been through this before. The FastFACTR team is fully aware that you might be worried about cash flow moving forward. No worries. Our invoice factoring for small businesses may prove to be the cash management tool that allows you to continue growing your business even during tough times.
In the meantime, we also have some other tips for navigating the current business climate:
1. Reconsider Payment Terms
In times of recession, cash flow can be challenging. So consider your own payment terms and how they affect your customers. You may want to extend terms slightly to make it easier for your customers to do exactly what you are trying to do. Then again, your terms might be extended as far as you’re willing to go. Pulling back might be a better option for you.
2. Project Future Financing Needs
Next, sit down with your management team and take a good look at your plans for the coming 12 to 18 months. Do your best to project future financing needs. If we do enter recession, and it runs deeply enough, you may have to put some of your growth plans on hold. You might also have to consider a number of alternate forms of financing to fund those projects that absolutely must move forward.
Invoice factoring may be the one thing that makes sense over the next year or so. Invoice finance is a way for you to raise short term capital for meeting those immediate financing needs. At least think about it.
3. Work on Upskilling
Times of slower economic activity are optimal for upskilling the current workforce. By training your team in new skills, you are preparing to take the company to the next level as the economy picks back up. You avoid stagnation at the same time. And if you play your cards right, a well-executed upskilling strategy could have your company poised to take the lead in your industry at a future date.
4. Plan for Recovery
We assume that you and your management team planned for a post-COVID recovery well in advance. Executing that plan is why your company is still doing so well despite all the problems COVID caused. Now apply that same thinking toward a potential future recession.
Create a plan for recovery based on the best data you have to work with. In the coming months, you may have to revisit and modify your plan. But either way, having a plan in place gives you a direction and a purpose should recession come. A good plan will keep you on the right track until things begin to improve.
Hopefully, all the predictions are incorrect and we won’t see a recession. Otherwise, here’s hoping any recession we do experience is short. We have already had a challenging time dealing with two years of COVID and its economic disruptions. We do not need the economic damage of a deep and prolonged recession.
As always, we are here to assist with invoice factoring. Do not hesitate to reach out if you are ready to leverage your accounts receivable for immediate financing.