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Creative ways to improve your cash flow despite a global pandemic (we’re serious)

(FINANCE) Keeping the lights on has become a major priority for many businesses country wide, so how do you keep your cash flow up during this crisis?

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cash flow

More than ever, cash is king. How can you stimulate cash flow in this era? How do you turn a trickle into a flow?

Business is down globally, with large and small businesses struggling with cash flow and supply chains everywhere you look. People are staying home and trying to spend less money, as many of them have lost their jobs or income.

We’ve rounded up the best advice from several sources to help you make some sense of it all–and hopefully some money, too. Nothing is foolproof, but we sincerely hope these tips help you and your business hang in there. These times are challenging, but we know things will improve eventually.

One piece of advice each of these experts notes is to look at your business differently during this period. One way to do this is to prioritize short-term gains vs. long-term plans. This doesn’t mean to act recklessly, but rather to evolve a little. Let’s face it, if you aren’t bringing in money and reining in costs at this point, you may not survive to bear that long-awaited fruit of your labor.

An outstanding example is the restaurant industry. Since most restaurants around the country have shifted to takeout only, the ones who are staying open have been creative in transforming their business model. Some clever shapeshifting I’ve seen in restaurants include: offering family packages, offering meal kits (i.e., uncooked meat, pasta, and sauces to be cooked at home), offering a popup market for basic groceries, offering virtual tastings (where you pick up the food, and they conduct the tasting or class online), giving discounts on gift cards, and offering cocktail kits.

Another key factor is to treat people well during this time: employees, customers, and suppliers alike will remember your behavior during the crisis once we return to better days. Remember, they are likely hurting, too. Ask yourself how you can best bring value to them while taking care of your bottom line.

Here is some specific advice we’ve collected from experts such as The Harvard Business Review, Deloitte, KPMG, and ECG Management Consultants.

  • Adjust variable costs to the extent possible. Of course, curtail non-essential company travel plans, training, meetings, and entertainment costs. Looking at labor costs, it is more challenging. Yet, try shifting contract work to permanent employees as a cost-saving–and employee-saving measure. Consider encouraging employees to take available paid leave, and encourage voluntary unpaid leave.
  • Verify your own lines of credit. Make sure your sources of financing are going to remain available to you.
  • Be cautious and do plan ahead with your inventory. You want to confirm that your supply chain of essentials is likely to remain reliable, but plan for a disruption. You may want to seek out additional sources or viable alternative products and raw materials. You need to be able to continue to supply YOUR customers.
  • Look realistically at any possible delays in your payables. Check in your area–you may be able to defer utility payments temporarily, or make a mutually agreed-upon arrangement with one or more of your suppliers to change the way you pay them. Do not do this willy-nilly, though–those supplier relationships are crucial, and you definitely want to keep the actual lights on.
  • Review your invoice and collection practices. At all costs, invoice on time with clear payment terms.
  • Consider your customers, their payment history, and reliability. Ask yourself–or them–how hard hit their industry is, how likely they are to struggle with payments. An honest, up-front conversation about ensuring payments (even if through a new agreement, like the ones you want to make with your suppliers).
  • Elect to deduct 2020 Disaster Losses on your 2019 taxes. Section 165(i) allows for this accelerated loss deduction on your tax return.
  • If you own or run a larger company or one with an almost certain return to good times and can afford it, you may even benefit in the future by pausing or greatly reducing your larger salary in order to keep paying employees and keep the company flush. I know, I know, this option sucks, but it garners good will among employees and the community that should ideally come back to reward you sooner rather than later. Save the company’s butt? You get a juicy bonus on the flip side, no doubt!
  • Throw out the rule book for some things. Waiting to release a product or content for a traditionally optimal time? Reconsider that–would people benefit from it? If it’s software, training, or intellectual property such as a book, musical content, or film, get that out the door NOW. People want it and need it. This means new customers! You may want to offer these cheaper than usual or even free, as an investment in the future.

Look into funding through no-interest or low-interest loans and grants. In addition to the SBA Disaster Loan government loan, search for additional sources of funding through private sector grants. Here’s a partial list of entities offering this type of relief, particularly for small businesses.

  1. Facebook is offering $100 million in small business grants, given in cash and also some Facebook ad credits.
  2. Amazon is offering $5 million in a Neighborhood Small Business Relief Fund for Seattle businesses.
  3. Kiva, the international microloan organization that offers small businesses zero-percent interest loans of up to $15,000.00, has recently expanded their loans available to U.S. entrepreneurs.
  4. The Opportunity Fund offers grants and low-interest loans mainly to small businesses owned by underserved entities, such as women and minorities. They are expanding their resources in light of the coronavirus impact.

I hope these tips help you with your business. I’m not only a writer cranking out content, but I’m also a small-business owner biting my nails over the income loss this has brought. I’d love to hear any ideas you have that you’re implementing for cash flow and survival. I want us all to make it!

Joleen Jernigan is an ever-curious writer, grammar nerd, and social media strategist with a background in training, education, and educational publishing. A native Texan, Joleen has traveled extensively, worked in six countries, and holds an MA in Teaching English as a Second Language. She lives in Austin and constantly seeks out the best the city has to offer.

Business Finance

Will cash still be king after COVID-19?

(EDITORIAL) Physical cash has been a preferred mode of payment for many, but will COVID-19 push us to a cashless future at an even faster rate?

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No more Cash

Say goodbye to the almighty dollar, at least the paper version. Cashless is where it’s at, and COVID-19 is at least partially to thank–or blame, depending on your perspective.

Let’s face it, we were already headed that direction. Apps like Venmo, PayPal, and Apple Pay making cashless transactions painless enough that even stubborn luddites were beginning to migrate to these convenient payment methods. Then COVID-19 hit the world and suddenly, handling cash is a potential danger.

In 2020, the era of COVID-19, the thought of all the possible contaminants, traveling around on an old dollar bill makes most of us cringe. Keep your nasty sock money, boob money, and even your pocket money to yourself, sir or madam, because I’ll have none of it! Nobody knows or wants to know where your money has been. We like the idea of taking your money, sure, but not the idea of actually touching it…ewww, David. Just ewww.

There is no hard evidence that cash can transmit COVID-19 from one person to the other, but perception is a powerful agent for changing our behavior. It seems plausible, considering the alarming rate this awful disease is moving through the world. Nobody has proven it can’t move with money.

There was a time when cash was King. Everyone took cash; everyone preferred it. Of course, credit cards have been around forever, but they’ve always been just as problematic as they are convenient. Like GrubHub and similar third party food delivery apps, banks end up charging both the business and the consumer with credit cards. It’s a trap. Cash cut out the (greedy) middle man.

Plus, paying with a credit card could be a pain. Try paying a taxi driver with a credit card prior to, oh, about 2014 when Uber hit the scene big time. Most drivers refused to take cash, because credit cards take a percentage off the top. Enter rideshare companies like Uber. Then in walks Square. Next PayPal, Venmo, and Apple Pay enter the scene. Suddenly, cabbies would like you to know they now take alternate forms of payment, and with a smile.

It’s good in a way, but it may end up hurting small businesses even more in the long run. The harsh reality of this current moment is that you shouldn’t be handling cash. No less an authority than the CDC recommends contactless forms of payment whenever possible. However, those cabbies weren’t wrong.

The banking industry has been pushing for a reduced reliance on cash since the 1950s, when they came up with the idea of credit cards. It was a stroke of evil genius to come up with more ways to expedite our lifelong journey into crushing debt.

The financial titans are very, very good at what they do, at the expense of all the rest of us. The New York Times reported on the trend, noting:

“In Britain alone, retailers paid 1.3 billion pounds (about $1.7 billion) in third-party fees in 2018, up £70 million from the year before, according to the British Retail Consortium.

Payment and processing companies such as PayPal (whose stock is up about 55 percent this year) and Adyen, based in the Netherlands (up 72 percent), also stand to gain.”

All kinds of related banking-related industries stand to benefit as well. Maybe we’ll go back to spending physical cash one day, but I don’t think there’s any hurry. Fewer old grandpas are hiding their cash in their proverbial mattresses, and the younger, most tech-savvy generation seems perfectly content to use their smart phones for everything.

We get it. Convenience plus cleanliness is a sweet combo. I only wish it weren’t such a racket.

If this trend towards a cashless future continues, there may be a possibility that travelers in the future may not experience what it’s like to fumble with foreign currency, to smile and shrug and hand over a handful of bills because they have no idea how many baht, pesos, or rand those snacks are. They may not experience the realization that other countries’ bills come in different shapes and sizes, and they may not come home with the most affordable souvenirs (coins and bills).

We shall see what the future holds. Odds are, it may not be cash money, at least in the U.S. I hope the cashless movement makes room for everyone to participate without being penalized. We’re in the middle of a pandemic, people. We need to find more ways to ease the path for people, not callously profit off of them.

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Business Finance

How NASA helps small businesses reach for the stars

(BUSINESS FINANCE) NASA has been providing $51 million in grants to small businesses and innovators.

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NASA grants

With the political and social climate that we are all trying to survive this summer, there only seems to be a few things that bring us a light of hope. For some it’s the little gestures that keeps the smiles on our faces; little helping hands that keep us going from day to day. But thanks to some forethought in our government system, there are some rather large helping hands coming down from the top as well. The organization that sends people to the moon is also making some dreams come true here on Earth.

NASA has just announced their latest batch of small business grants. Grants that amount to a total of approximately $51 million. This money is being sent out at the most crucial early-stage of small business funding. Over 300 businesses are receiving up to $125,000 to develop and bring new technologies to the world.

This grant system has been in place nearly as long as NASA itself. The Small Business Innovation Research/Technology transfer program is designed to bring in entrepreneurs and inventors’ ideas, and combine them with NASA’s assets to bring their dreams to fruition, bringing something from the lab to the marketplace.

It is set up into a three-phase system. According to The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), the first phase, Idea Generation, provides grantees with up to $125,000 for a 6 – 12 month period to “establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II”. If they succeed, they may be eligible to move onto Phase II, where they will be awarded a new grant of $750,000 for 2 years to continue the R&D efforts and start on a Prototype Development. Phase III is called the Infusion/Commercialization stage and it is the culmination of years of work and grant access for these businesses. This also includes a few extra requirements like matching funding for things like marketing.

Over the years, the selection has covered numerous disciplines with an extraordinary range of industries. Some of the highlights this year are high-power solar arrays, a smart air traffic control system for urban use, a water purification system for use on the moon, and improved lithium-ion batteries. These are just a few of the many innovative projects. The list covers a huge assortment, but a few people have noted the number of neuromorphic computing efforts as well.

This list is updated periodically throughout the year as each deadline is met from previous grant holders. It’s a constantly updating assortment of tomorrow’s toys, and a great way to look toward the future.

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Business Finance

Senate unanimously votes to extend PPP coverage

(BUSINESS FINANCE) The U.S Senate extends PPP spending until August 8th in an effort to support small businesses who have been hit hard by the pandemic.

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PPP application

Small businesses trying to survive the pandemic have been given a 5-week extension, until August 8th, for money remaining in the Paycheck Protection Program (PPP) to be spent. The Senate voted Tuesday evening, less than 4 hours before it was set to end, to extend the federal loan program that was slated to end with more than $130 billion in unspent loan money.

The approval of the extension required unanimous agreement from all 100 senators, which many lacked confidence would happen. Senator Jeanne Shaheen (D-NH) said, “I came here thinking that we would not be able to get agreement.” But with outbreaks on the rise and states slowing effort to reopen their economies, the consensus is that another measure will be required as the $2.2 trillion stimulus law expires at the end of July. PPP has become a bipartisan action as lawmakers from both parties are inundated with requests for assistance. The program has apportioned $520 billion in loans to over 4.8 million American small businesses across the nation, managed by the Small Business Administration.

The SBA faced criticism for distributing billions of PPP funds to publicly traded chains, in addition to the small businesses it was intended. $38 billion were ultimately returned to the government after attention was brought to the high profile recipients.

The short-term agreement came together with advocacy from across the aisle from senators including Sen. Marco Rubio (R-Fla.), Susan Collins (R-Maine), Christopher A. Coons (D-Del.) and Minority Leader Charles E. Schumer (D-N.Y.). Senator Marco Rubio (R-FL), chairman of the Small Business Committee said before Tuesday’s vote for the extension, “Obviously, we’ll have to be more targeted at truly small businesses and, in addition to that, I’m also developing a program to provide financing for businesses in underserved communities or opportunity zones and other ZIP codes that would fall in that category.”

The Treasury Department and SBA credit PPP with saving millions of jobs. Though rules have been loosened by Congress, the SBA, and Treasury to allow more companies to receive funds and make loan forgiveness easier, borrowing from the program has slowed to a trickle.

The legislation is now headed to the House, which had already left for an expected 2-week recess before the bill was passed by the Senate. The bill would also require President Trump’s signature.

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