What to do if a cash flow gap has already occurred

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3. Manage accounts payable wisely
In parallel with managing accounts receivable, it is important to optimize accounts payable. Here, the main task of any business is to extend the payment period as long as possible without consequences for the company's operations: fines, reputational losses, etc. You can agree with suppliers and other contractors on a deferment in advance.


The longer the payment deferment, the more time there is to accumulate reserves to cover these obligations. This reduces the likelihood of a cash flow gap in the future.

In other words, the business's task is to maneuver between accounts payable and france phone number list accounts receivable: to increase one and reduce the other. Here, diplomatic skills will come in handy in many ways, and the company's reputation will also play a role.

4. Review your business expenses
Regular analysis and review of current expenses allows identifying those costs that can be reduced without affecting the project's operations.

Often, the cause of a cash gap is irrational expenses that a business cannot control. Optimizing expenses is an opportunity to free up funds that can be used for higher priority tasks or to create reserves in your account.

To cover the cash gap, you need to give up some business trips and corporate events. In the most difficult times - from improving the skills of employees (temporarily). For example, a coffee shop can write out planned expenses and cross out non-essential ones.


5. Keep the airbag
An emergency fund is a great tool to cover cash flow gaps. In critical moments, you will always have a spare amount of money to pay for urgent expenses.

The size of the reserve may vary depending on the specifics of your medium or small business, but it is recommended to have reserves that will cover at least 1-3 months of current expenses. This reserve will help the company stay afloat, including during difficult periods of work.

If you are already faced with a cash gap, you should not panic, but make clear and quick decisions to regain control of the situation. You can use one or more methods to reduce the cash gap.

1. Eliminate low-priority payments, push back other payments
First, you need to determine which of your obligations can be postponed to a later date. This could be rent, payment for some supplies that are not critical. Try to agree with counterparties on a deferment in order to focus on the most important payments - employee salaries, taxes and priority supplies.

If you are unable to agree on a direct deferment, you can try to split the payments. For example, you need to pay 1 million rubles. You can ask to split this amount into 4 parts and pay the bill weekly over the course of a month.

2. Stimulate sales
Increasing sales is one of the most effective ways to quickly replenish cash reserves. For example, if there are a lot of goods in the warehouse, and money is needed here and now, you can try to introduce discounts on services, products, promotions for customers to increase the number of orders.