How to Control Cash Flow During Financial Crisis

How to Control Cash Flow During Financial Crisis

How to Control Cash Flow

 


Changes in economic value that greatly affect a country in the field of development and development, this can bring losses to a country. The form of losses can take various forms, such as delays in education, development operations and other sectors. Although currently information technology and the internet are increasing sharply, they cannot predict what risks will occur in the future in a business. This requires prevention or in the business world it is called proper mitigation so that future losses from an economic change will minimize the financial crisis.


Controlling cash flow under normal conditions will be quite difficult, especially during a financial crisis. Of course you have to be smart to rack your brain to give the best decisions on company finances during a crisis. Some small companies and large companies certainly have cash to cover operations during the financial crisis. But how long can the cash cover the company's operations? Of course, cash flow must have a limit, if you don't immediately find a way to control cash flow during a financial crisis, the company can go bankrupt and many employees in it will have massive layoffs because the company cannot finance its operations.


Read: Business Strategy to Compete in the Digital Age


A financial crisis is an event in which asset prices experience a drastic decline in value, businesses and customers cannot pay their debts, and financial institutions are unable to maintain liquidity. Financial crises often occur when investors withdraw their nominal assets and also sell these assets because there will be a decline in economic value in a country, in addition to the causes of financial crises such as stock market crashes and currency crises.


Factors Causing Financial Crisis


What factors contributed to the financial crisis? let's see below


  • Uncontrolled Inflation Rate


When a country experiences inflation, the government will try to fix it. So that the inflation rate does not last too long and will make losses to the community. Then if the government can't control it, the government will print too much money, so it's called hyperinflation.


  • Slow Economic Growth


A financial crisis in a country will create high inflation as well as make the economy grow slowly, so that it will cause a high unemployment rate as well, then problems will arise in society, both socially, economically and legally.


  • Free Fall Stock Market


The financial crisis can also affect the capital market so that many investors sell their shares at cheap prices in order to quickly get their capital back and also investors are reluctant to inject their funds because the country is slow in economic value.


How to Control Cash Flow During Financial Crisis


When a country experiences a financial crisis, it will inevitably experience currency instability, a decline in people's purchasing levels and also many bankruptcies of companies in it which cause people to experience social unrest and chaos. If the condition is very severe then the country can experience massive inflation as in recent years in African countries and in Europe such as Greece, already and so on, then what should be done during the financial crisis?


  • Reduce Operational Cost


When the financial crisis occurs it will affect almost all aspects of the company. Then the most important way is to reduce operational costs within the company so that it can still survive until the financial crisis can be resolved, but must consider which is the most crucial in the development of the company's business.


  • Receivable Relaxation


In general, when a financial crisis hits a country, there are certainly many companies that propose debt relaxation to the bank. this can make the company a little leeway to survive during the financial crisis, the company usually proposes relaxation in the form of cutting interest, delaying installments and only paying the principal debt.


  • Speed ​​Up Incoming Money


Building a sales strategy so that money can quickly enter the company and so that it can be produced again quickly is with a Pre order strategy system and must pay first before the goods arrive, several large companies that use this system have proven to be very successful and can still thrive in the midst of the financial crisis .


  • Looking for Additional Capital


The three methods above are still not able to overcome the problems that exist in the midst of the financial crisis, so the company needs to find additional capital or funds, usually this happens in small and still growing businesses.


This additional capital can be done by contacting a financing institution or by contacting Leasing with an asset guarantor from the owner of the company.


So, those are some reviews on how to control cash flow during a financial crisis that occurs in the company, but in controlling cash flow it must really have accurate data so that when using a business strategy it will minimize losses in the company.


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