Cash is King
June 12, 2020
By Anthony Mackle, senior vice president and chief financial officer, Ingram Micro
I received the Deloitte whitepaper “Managing Cash Flow in Crisis” (attached) from a colleague and found it worth sharing. The main takeaway that businesses need to manage cash flow and cut costs struck a chord with me because nearly every partner I have talked to in the past few months has said that their cash flow has been interrupted.
When asked for advice on this topic, I present the following:
Cash Flow Planning
It is now more important than ever to understand your cash flow. Can you survive an interruption in payments from your customers? Do you have the liquidity to pay your bills if payments to you get disrupted? Ask yourself the following questions: How are your customers paying you today? Are they taking longer than normal? Has their cash flow been impacted or will it? Can you get extended terms from your suppliers (for example, asking your landlord if rent payments can be delayed)? You can then model your cash flow projections and consider what you would do under several scenarios. Can you access funding if needed?
“Managing Cash Flow in Crisis” outlined this idea perfectly: “Under normal business conditions, companies primarily focus on the profit and losses–growing the top line while managing the bottom line. Routine back-office activities such as paying bills and turning receivables into cash are often taken for granted. In the current abnormal business conditions, smart companies are shifting their focus from the income statement to the balance sheet.” We all need to think like a CFO, and now as we go back to work, it will be even more critical as businesses strive to get back to normal.
Manage Soft Costs
Start out by understanding costs, both fixed (rent, depreciation on furniture, etc) and soft or variable (travel and entertainment).“Managing Cash Flow in Crisis” suggests starting with the travel and entertainment category, which in my mind is an easy ask during times of social distancing. Managing hiring, cutting temporary employees (move workload to permanent employees), and encouraging employees to take a vacation are all tactics that will reduce your overall payroll expense. Ingram Micro has implemented many of these suggestions while ensuring that the business is supported.
Look at Financing
This is absolutely critical for cash flow and will help to win deals; look to financing to get yourself paid faster. The recommendation for every partner is to leverage Ingram Micro or a financing company’s balance sheet and not your own. Cash is king and it speaks volumes during a crisis. In many cases, a financing company will pay you upfront and provide the customer with extended payment terms. Always make sure to engage your Ingram Micro credit representative who will recommend the best financing available to close the deal and get you paid faster. We want to help make your life easier!
Partners can and should look to Ingram Micro for support to win business and ensure a healthy cash flow. Please do not hesitate to reach out to your Ingram Micro account manager to review available options.