You're facing reduced revenue streams. How can you adjust your budget to maintain cash flow stability?

Via my experience in supply chain leadership with a finance/FP&A focus, to help all teams, consider... Strategic expense review: Cut non-essential costs, prioritizing SG&A List items to eliminate with timelines Use zero-based budgeting Protect core operations: Ensure cuts don't harm essential functions Maintain key supplier and customer relationships Analyze impact of reductions on performance Risk mitigation and planning: Assess risks of cost cuts Develop contingency plans Implement rolling forecasts Explore revenue diversification Balance immediate savings w/long-term stability. Regularly review & adjust your strategy as conditions change. Prioritize preserving revenue generation & operational efficiency in all cost-cutting decisions.

You have to focus on why you are seeing reduced.revenue when you look to cut costs, so you can ensure that you reduce costs which will not further detriment your revenues. What is critical is not to enter a panic based cost cutting phase and being very deliberate and measured in your actions, cutting unnecessary costs (unfortunately every business has them) and costs which won't further detriment your revenues.

(*)Look into detail the nature & trend of operating expenses which are more related to revenue, like marketing. Will propose to cut the marketing budget as its not achieving the required results. (*)Negotiate better deals with landlord to convince to reduce the rent, if the Company is in retail and has multiple stores across different cities. (*)Check if the decline in revenue is due to charging high price as compared to competitor? (*)Ask & negotiate for increase in credit period from the suppliers of raw materials. (*)Communicate with bank & try to obtain running finance facility. (*)Do the detailed analysis of primary and support activities as part of value chain analysis, to see which activity is not contributing to customer value.

Cuando los ingresos se ven afectados, reducir costos es un acto estratégico, no reactivo. ?? Debemos mirar más allá de lo obvio, ajustando sin comprometer la operación central. Desde renegociar contratos hasta revisar gastos innecesarios. También es crucial evaluar el impacto del tipo de cambio si realizamos operaciones en moneda extranjera y establecer estrategias de cobertura puede ayudarnos a mitigar riesgos cambiarios y proteger la liquidez a largo plazo. Lo cierto es que cada ajuste puede hacer una diferencia en nuestra liquidez. Es clave enfocarnos en cambios que mantengan la eficiencia sin perder de vista lo esencial.

In my opinion, reducing non-essential expenditures is often the first move to preserve cash flow. A strategic review can help identify areas where you can minimize costs without impacting core operations. In this type of situation, I'llbe looking to the optmisation of SG&As first.

Focus on essentials. Allocate funds to critical areas that directly support revenue generation and operational continuity, such as essential raw materials and key services. Invest in initiatives that have a clear potential for high ROI and align with your core business strategy. Control costs. You must differentiate between essential and non-essential expenses, minimise discretionary spending, and conduct cost-benefit analyses to ensure efficient use of resources. Optimise cash flow by negotiating flexible payment terms with suppliers and closely monitoring expenses to identify savings. Communicate clearly to ensure internal and external stakeholders understand and support the focus on essential and revenue-driving expenditures.

Allocating resources to critical business functions ensures that your organization stays operational and competitive. It's about spending wisely on what drives immediate value.

While this advice is accurate and beneficial, these decisions can be very difficult to make. There are egos, both individual and corporate, that hamper strong decision making. These are "pet" projects, brand R&D, "influence" marketing, vanity sponsorships and the like. To quickly get to solutions that make an impact, imagine sitting in a bankruptcy court in the future, explaining why the spending on these projects were not terminated or at least placed on hold, while other, more relevant expenditures were not made. Try to get project stakeholders to a "safe" and objective environment to make these difficult but important decisions.

Aquí aconsejo priorizar los gastos que tienen retornos monetarios más rápidos. Renegociar plazos de pago de proveedores también podría ser una buena alternativa, aunque esto nos aumentara un poco el precio o tuviéramos que afrontar algunos pagos de intereses por notas de cargo, la idea es priorizar la creación de flujo de forma temporal hasta salir del problema.

When our clients ask us where their cash is, we often point to the inventories they hold. The velocity with which you can "turn" inventory can dramatically reduce the working capital needs of business, and therefore overall cash needs. The two primary concepts we focus on are: 1 - Cash Conversion Cycle (CCC), the time it takes for a dollar to travel from AP payment, through inventory and ending in the AR collection. 2 - Sunk Cost Theory, which is vital when deciding on selling obsolete or aged inventory at a discount. The amount you paid for the item is irrelevant - only the amount you can relieve from inventory and re-invest in fast-turning, profitable items is impactful.

For inventory based businesses reducing revenues often leaves you in a position where you have cash sunk in slow moving stock. Identify the drivers impacting your revenue,.for example - new competitors - competing products - same.product at a lower price, or - macro economic factors impacting your buyers. It is critical to understand the driver's as it empowers you to react, firstly to move the inventory you currently have through discounts, offers, bulk discounts etc to free up cash. Secondly it will impact what you have to do next in terms of strategy, examples are - update your product to compete with a new competitor - find new suppliers or negotiate with current ones to secure lower prices - review pricing models

También en estos casos tan particulares podemos optar por liquidar inventarios de muy baja rotación, especialmente si estos conllevan algún tipo de perentoriedad. Pero también me gustaría incorporar en este apartado la posibilidad de liquidar activos que tenemos anclados en algún depósito de la empresa y que no tenemos planeado ponerlo en funcionamiento ni en el presente ni en el futuro, o que han sido reemplazados por nuevas tecnología, pero no nos hemos desecho de ellos y los conservamos sin ningún fin en particular, es momento de deshacernos de ellos y recuperar algo de dinero.

Según mi experiencia, realizamos dos tareas importantes, ajustamos los inventarios planificando nuestra producción en base al forecast de nuestros clientes y liquidamos productos de baja rotación que se encontraban en nuestros inventarios, como resultado nos permitió mejorar la liquidez de la compa?ía en corto plazo. Permitiéndonos utilizar los recursos en cumplimiento obligaciones con nuestros proveedores.

Si se llegara a producir una escases temporal de flujo de caja, además de las recomendaciones mencionadas en este apartado también deberíamos considerar la oportunidad de ofrecer una renegociación y una quita a algún cliente con el que podríamos traer un litigio que tiene tiempo sin resolverse y que lo tenemos provisionado como moroso o incobrable.

Acelerar las cuentas por cobrar es vital cuando el flujo de caja se aprieta. ?? Ofrecer incentivos para el pago anticipado, como peque?os descuentos, puede mejorar significativamente la liquidez. Además, automatizar el proceso de facturación y cobrar a tiempo crea una cultura de pagos puntuales. Mantener un control riguroso sobre las cuentas pendientes y aplicar políticas de crédito más estrictas son pasos que no solo protegen el flujo de caja, sino que también reducen el riesgo de incobrables.

Proactively approach receivables to ensure timely payment. Clearly define the terms and conditions of payment in your contract and review them with your customer before signing it. Generate your invoice as quickly as possible and verify that it's 100% accurate. Then, make an appointment with your customer to review the invoice and obtain approval. Become aware of the customer's invoice payment process and know where you need to go to get your invoice paid on schedule. This might mean calling the accountant monthly and indicating you have an approved invoice. The squeaky wheel often gets paid first.

Many of today's accounts receivable departments are stuck in decades old payment and collection processes. Banking and treasury technology, as well as alternate payment platforms, have truly impacted the speed, accuracy and simplified management of the AR function. Ensure your invoice is correct at first presentation, detail as much relevant "purchasing" department information as possible (Purchase Order #, shipment date, detailed line-item descriptions, etc.), and provide as many forms and avenues of payment as possible. Self-service customer portals, easy to understand statements of the account, and consistent communication are some things to consider implementing or improving.

When thinking about "costs", it helpful to remember payment terms are part of the overall expenditure. The longer the duration between procurement and payment, the less working capital needed. Communication in advance, and honoring the altered agreement is vital so that the relationship does not turn adversarial. Your goal is "partnership" with the supply chain, not arbitrary or one-sided payment or cost reductions. You will set yourself apart from your competition, and the goodwill may last when conditions improve.

A veces, retrasar los gastos es una herramienta útil para gestionar la liquidez, pero debemos hacerlo con estrategia. ?? Es importante identificar qué gastos pueden esperar sin comprometer relaciones clave o la eficiencia operativa. Negociar plazos más largos con proveedores estratégicos puede liberar capital para el corto plazo, pero debe hacerse con precaución para no perder condiciones favorables o da?ar alianzas comerciales.

Postponing non-urgent expenditures gives you more flexibility in managing liquidity. Building strong relationships with suppliers can help negotiate favorable terms without hurting your supply chain. I think the key here is to develop a strong relationship with the suppliers which helps to find a common ground and get their understanding.

En situaciones de baja liquidez y complementando esta sugerencia, consideraría importante aprovechar para reevaluar la estructura de financiamiento de los Activos. Cómo todos sabemos, una regla básica de las finanzas sugiere que los activos de corto plazo deben de financiarse con deudas de corto plazo y los activos de realización incierta o de largo plazo deben de financiarse con deuda de largo plazo. Solo en ocasiones donde el efectivo sea escaso como aquí se menciona y siempre y cuando se tenga certeza de su recuperación posterior, se podría refinanciar algunas deudas de corto a largo a largo plazo con la intención de disminuir la carga de intereses actuales que podrían contribuir a abultar los pagos de la deuda de corto plazo Responder

Our clients historically have prided themselves on their "conservative" approach to financing - They have no debt. Post-pandemic, we feel a meaningful relationship with a lending institution focused on your type of business and industry can be vital to minimizing the impact of future economic shocks, or just revenue slowdowns. Nurture the relationship, borrow capital that you may not need, demonstrate repayment abilities - these are things that may allow you to outlast your competitors in difficult times. Always be aware of payment terms, and make sure you understand the interest rate on an ANNUAL basis. If this information is difficult to obtain, perhaps it is NOT the right product or relationship.