It’s no doubt that Massachusetts businesses have made great strides when it comes to adapting to the COVID-19 pandemic, and in light of new medical developments, the economy is beginning to open up. This also means that travel along the Cape Cod Canal bridges is also picking back up in anticipation of the summer months. What does this mean, however, for businesses which have adjusted and become comfortable in the present day-to-day of their business operations?
As a regional commercial lending manager with more than 30 years of experience, change is not new to me, or to Rockland Trust. That’s why I tell everyone that now is the time when business owners should be thinking strategically about what their short- and long-term goals look like in the wake of 2020. But this doesn’t have to be daunting. Just follow three easy steps:
1. Identify Changes And Trends In Cash Flow
It’s important that business owners ask themselves if they will be able to get by should revenues remain flat from the prior year. If the answer is no, or even maybe, now is the time to begin looking for ways to conserve capital. This means remaining as liquid as possible to have the flexibility of handling unforeseen emergencies or increased demand. I would also encourage connecting with other businesses in your industry to see how they are navigating these turbulent times. Now more than ever, it’s truly important to talk with your community.
Now, say your revenues go up by 20 percent – finding a way to fund this growth can be equally challenging. In this situation, I recommend requesting longer payment terms from suppliers, or conversely, accelerating terms for the repayment on receivables. By monitoring your payables and receivables more closely, you can allow for greater flexibility with your cash flow. I also encourage business owners to discuss their working capital strategy with their bank. Lines of credit, among other solutions, can be beneficial in times like these so long as you are comfortable with the terms.
2. Maintain Accurate Financial Documentation
In spite of the chaos, tracking and maintaining quality financials should also be a continued priority. Time after time, our commercial lending team will speak with new customers and ask the questions, “How are your margins?” “Are there trends in your cash flow?” Many cannot answer these questions as they simply do not know, and that’s OK because this is where a bank like Rockland Trust or a CPA can help. Ensure your business is prioritizing data and financial documentation, as well as reviewing it on a regular (monthly) basis. This will help your business survive difficult times and thrive in good times. Whether you need to reduce overhead or raise more capital, understanding the financial standing of your business on a regular basis will enable you to quickly make informed decisions as needed.
3. Build A Team Of Trusted Advisors
Lastly, you need to build a team of trusted advisors; this should include a CPA, an attorney, a commercial banker and an insurance provider, to start. This group can provide a wealth of knowledge and expertise. It’s important to expand your horizons and recognize where others outside of your organization can provide value. Having a team of advisors on your side will make updating your goals and business strategy easy, as they will provide you the guidance necessary to be confident in your next move.
Brian Griffin is Senior Vice President and Regional Manager for Commercial Lending at Rockland Trust in Plymouth. He can be reached at Brian.Griffin@RocklandTrust.com