Fiscal cliff hurting cash flow before Jan. 1 even arrives

You can’t jump online or turn on the news without hearing about the looming fiscal cliff. But if you’re like many of your peers, you’re probably feeling the effects already.

That’s what just released research out of the Association for Financial Professionals has uncovered.

More than a third (36%) of companies have already taken steps to protect themselves in the event the double whammy of automatic spending cuts and the end of key tax breaks occurs in the next few weeks.

And another half of your peers say they’ll make some key moves should we actually go over the cliff.

If any of that third is in your customer or supplier databases there’s a chance you could be feeling the effects of this financial debacle … even before it actually comes to pass.

And maybe even more importantly, should your company make moves of its own?

Take a look at what companies have done already and the steps they’re planning to take come January so you know what to guard against, where to capitalize and what to possibly imitate.

What they’ve done pre-cliff

That 36% hasn’t just hunkered down in anticipation of the cliff. They’re making some real and at times dramatic moves:

• 55% have reduced and/or delayed capital spending
• 52% have frozen and/or reduced hiring
• 27% have shrunk payrolls
• 22% have shortened the duration of the short-term investment portfolio
• 21% have reduced current/planned inventory levels
• 16% have tightened credit standards for trading partners, and
• 11% have delayed payments to vendors.

So depending on your relationship to the companies who’ve already made these moves, you may be feeling the effects in anything from your order totals to your collections.

And this is before anything’s even happened yet!

What they’ll do if we go over

You’ll see even more dramatic shifts should that dreaded cliff happen.  Check out what your peers have planned come January 1 unless there’s an agreement:

• 60% would reduce and/or delay capital spending
• 59% would freeze or reduce hiring
• 38% would lay off employees
• 21% would tighten credit standards for trading
• 20%  would reduce current/planned inventory levels
• 19% would shorten the duration of the short-term investment portfolio
• 13% would delay payments to vendors, and
• 13% would close locations.

Only time will tell what will happen – we’ll know in a couple of weeks. But it’s a smart idea to at least start thinking about what your company will do in the event Washington can’t avoid the cliff.