New cash flow benchmarks: Small biz cash reserves

If you have any smaller businesses in your customer base, you’ll want to check out some new cash flow benchmarks. And they come courtesy of a recent survey on cash reserves of firms with 100 employees or fewer by Expertise.com

Small businesses were asked last month about their present cash reserves in the midst of the COVID-19 crisis.

And their responses can offer you a heads up on how long these companies can keep paying you.

Cash reserves: 3 months? 6? 12?

Here’s how long these businesses feel they can stay afloat with the cash they have on hand:

• 1-3 months: 26%
• 4-6 months: 26%
• 7-9 months: 8%
• 10-12 months: 7%
• more than 12 months: 13%, and
• don’t know: 16%.
  

The remaining businesses? They have already shut down.

Protecting your cash flow

With so many firms facing such a short lifeline, their cash flow woes could quickly turn into yours.

Make sure your credit and collection staff know this is not the time to let invoices go even a day or two past due.

But collecting might not be as straightforward a process as it used to be.

It’s likely taking a bit longer for your invoices to make it through customers’ payment processes these days. And while you and your team can’t do a whole lot about that, you can make sure you understand how things work now so you understand what you’re dealing with.

The folks at Baker Ing suggest in a new whitepaper that you send an email to your customers to ask just how their payment process has changed during the coronavirus crisis and what you need to do differently.

Maybe they’ve added an extra layer of approval for purchases. See if you can get that contact info for that individual so your team knows whom to reach to get a signature on your company’s invoices.

That way however long their cash reserves last, your company will keep getting paid.