Discussion with suppliers and update of cash flow forecast
Achieve transparency. This is the main objective, to get your suppliers to give you as much information as possible in order to have more information and make the right decisions. But… how? And, how to manage the relationship with suppliers in difficult times.
Ask them about their situation, and try to understand if there is a risk that they may not be able to continue with their operations so that you can have a plan B. The more information you have, the less risky your decisions will be.
Tell them what your situation is, and when you might be able to make the payments you owe them. It’s a complicated, but very necessary conversation. In the end, business is based on personal relationships, and being transparent with your suppliers does not guarantee anything, but it increases the chances that they will make a positive gesture to you in a complicated situation.
Try to delay the due dates, and if this is not possible, try to get a deferred payment plan or even a discount on the invoice for early payment. You will be amazed at the discounts they can offer you for paying a bill in advance.
Keep in mind that your small suppliers will also have serious difficulties to stay afloat, so try to pay your debts as soon as possible within the agreement you have reached with them.
How to manage supplier relationships in difficult times
Once you have talked to your suppliers, update the changes in your cash flow forecast to have a fully updated view of the future of your business. In this way, you will be able to know:
– The impact the pandemic will have on your business
– Which customers will pay you, how much and when
– What expenses will you incur in the coming months
– What is the minimum income you need each month?
– How your cash flow will evolve in the coming months
Keep in mind that this does not guarantee anything, but it will give you a much more realistic view of what can happen, so that you can plan your next steps.
Bit by bit, you will get a clearer picture of the future liquidity of your business, or even know how much money your company will have in the coming months.