We thought you could benefit from a COVID-19 cash preservation checklist. Our team is comprised of a really diverse and fiscally resourceful group and since they get a front row seat to your business transactions we knew they would probably have some great ideas on how you could preserve cash. Here is our list of 10 things to preserve cash.
1. Write off bad debt to reduce HST owing. By writing off bad debt we can reclaim the HST we paid to CRA. Collect what you can but after an invoice is past due by 90 days (and post COVID-19) it’s likely time to let it go.
2. Pull back on user-based software costs. To the extent possible, negotiate with user based software companies (Azure, AWS, Atlassian, Salesforce, etc.) to minimize users and/or request a COVID-19 pricing adjustment, especially if you have reduced your staff via layoffs.
3. Shorten the work week. A sudden 20-25% drop in revenue may mean you can preserve cash flow by reducing staff and salaries to a 4 day work week without impacting service levels.
4. Turn off online ads. Unless you are very confident that your online ads are relevant to the current market sentiment you should probably pause them (and save the money) until you get that sorted out. Don’t forget those job postings you promoted just before COVID-19 hit.
5. Reach out to your landlord. If your team is now all working from home your landlord could be saving some costs on hydro, cleaning services and supplies, and bathroom supplies. That’s reason enough to reach out and see if they can lend any rent relief or payment deferrals during this difficult time.
6. Defer all loans and leases. Banks are all offering 6 month principal payment deferrals. Other lenders are likely open to the same. Reach out before your next payment is due.
7. Stop ordering office supplies. Do you have an ongoing water cooler and coffee club subscription?
8. Reduce office phone and internet. Contact your service provider to explore options to reduce office utilities and service maintenance contracts.
9. Pay invoices late. Well, preferably not without asking. Reach out proactively to vendors to see if they are open to changing their terms to allow some extra time for payment.
10. Pay invoices early. How does this save money? If you have the cash today another option to consider is to ask vendors to consider an early payment discount.
We’ll continue to share other cash saving tips as we find them. In the meantime do not forget to reach out to your commercial bank to request a 10% increase to your line of credit. Every bit helps.
