With the recession and downgrades it is becoming imperative for businesses in South Africa to look for innovative ways to manage their finances. To overcome the economic challenges it is key to understand how your business and cashflow will be impacted by the recession and downgrades, so that you can plan ahead and implement measures that will ensure your business remains sustainable and survives in the tough economic climate.
It is important to take note of the following risks to your business:
In such challenging economic times and in the face of these risks businesses have little choice but to manage their cashflow and liquidity requirements better. Having access to cash reserves is probably the best way to maximise liquidity, as the downgrades could mean that the cost of borrowing will become higher.
Another option of managing cashflow is through debtor management, which allows businesses to receive funds quickly and extend creditors’ payment terms.
And yet another way of improving your cashflow is creating savings, which is really about optimising what is already in the business, for example being more efficient and therefore your overall interest rates would be lower.
Gone are the days when it is ‘business as usual’. Businesses will have to tap into the latest available technology and data to become more efficient and equipped to ride out the economic storm.
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