Trump is attacking the post office and we all know why, but that isn’t what this post is about. This post will help deal with the fact that because of Trump’s attacks, mail delivery is being purposely delayed and examining the impact of those delays on small businesses.
In normal times cash flow is critical to the viability of any sized business. In normal times you could manage the ebbs and flows of your cash flow so that your business remains solvent. We are not in normal times. The pandemic, which has caused unprecedented levels of uncertainty, has increased the importance of cash flow exponentially.
It is incredibly challenging to manage cash flow, to properly plan for the ebbs and flows, because of the uncertainty. There is uncertainty that your business can generate enough revenue during this pandemic. There is uncertainty that your customers will have the resources to continue to buy your products and/or services. There is uncertainty regarding regulations and mandated closures. There is uncertainty with landlords, vendors, debt holders, investors and banks being open to working with you so your business can survive. There is uncertainty around the health of your employees. And the list goes on and on and on.
Now we have to deal with the uncertainty of our mail being delivered. Of all the craziness in the last 6 months, now we get this mess dropped in our laps. Not that big of a deal you say? This is a huge issue for businesses and their survival.
I’ll start with the obvious. Most businesses are paid by check. Those checks are sent through the mail. When the mail is delayed, businesses access to cash is delayed. Because of the delay, businesses may not be able to fund payroll, pay health insurance premiums, or pay vendors. Nothing like telling employees, during a pandemic, that you can’t make payroll because the president has an issue with the post office.
The delay can also impact sales and future cash flow. Since there is so much uncertainty due to the pandemic, many businesses have tightened and begun strictly enforcing their credit terms. We’ve all heard from overdue customers that “the check is in the mail”. That used to mean if the check didn’t arrive in 1-3 days, there was an issue. Now a customer says that and the check might actually be in the mail but not arrive for 1-2 weeks (or more). You are forced into a deciding whether or not to put a credit hold on a customers account and not fulfilling their orders until you receive payment. Placing them on hold reduces sales and impacts future cash flow.
Then you need to consider the other side of this. My clients have key vendors that we can’t risk being put on a credit hold and not being able to obtain critical materials. In order to avoid that, there are vendors that are paid two weeks early so that the vendor hopefully receives the payment before a hold is placed on our account.
How great is this situation for cash flow? We are in a pandemic, filled with uncertainty and businesses are receiving customer payments late and need to pay vendors early for reasons completely out of their control.
Here are 5 things to do that will help you get your cash and avoid using mail. The beauty of setting these up are that you’ll get customers in the habit of using these methods and you can continue to use them once the pandemic is over.
Receiving Payments
- Have your customers pay via ACH. Talk with your bank to get the proper information you’ll need to give to your customers (routing number, account number) so that they can send funds directly from their bank account to yours.
- If you use QuickBooks, sign up for their payment processing service. You do have to pay to use this service, but it will help you get your cash on time.
- Accept credit card payments. Open a square account and have the ability to take credit card payments. Again, you’ll need to pay for this service, but you’ll get your cash on time.
- Allow customers to pay via PayPal or Venmo
- Talk with your customers!
Sending Payments
- Work with your bank to enable you to pay vendors via ACH.
- Get a credit card that offers rewards and pay via credit card. (I have a client who uses AMEX and they get at least two free tickets to Europe a year).
- Talk with your vendors
This whole situation is crazy that we all are trying to get through. If you have good relationships with your customers and vendors, communication is vital and giving people the benefit of the doubt goes a long way.