A financial crisis is not a reasonable entity. It can’t be rationalised with. There are no negotiation tactics available that can put a financial crisis to bed. Saving your business from debt would take a tremendous amount of effort. There just aren’t any soft answers when it comes down to a financial crisis. It is a scenario that will require strength of character and huge resources of personal will. Here are the steps you need to follow in order to survive a financial crisis.
Floating Through A Crisis
Realistic Risk Assessment
A financial crisis is normally not the result of a single decision that was made with thoughtless rapidity. The drying up of working capital is a process that gets build up from an accumulation of financially unsound decisions. This is where your risk management team will comprehensively analyse and provide solutions for the problems that you are facing. An intelligent warning system, well immersed in the everyday working of your organisation, will have valuable insights about the risk model your company is functioning under. It’s always better to avoid a crisis than to find yourself embroiled in one. Making your risk assessment team core in this regard is a useful strategy going forward.
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Reviewing Your Options
The first step you need to follow in order to combat crisis is to get a realistic review in place. Every asset the company owns should be numbered and assessed for monetary value. This would include, investments, physical assets and services rendered. These should be scrutinised for monetary accumulation and non-performing assets should be promptly turned into liquid cash that can be used to pay off your debts. An exhaustive list of the money you owe should also be taken into consideration. This will help you understand the scale of which you would need to minimize your operations in order to stay afloat. If you successfully plug your cash bleeds by contextualising necessities and underutilised assets, this means that you are on the right track to getting out of your financial crisis.
Approaching An Expert
As a business owner, it can be very hard to approach someone from outside your company with your financial problems. The default tendency would be to solve the problems you are facing in-house. At this point, it will be well worth remembering that the financial problems you are facing now could very well have been conceived in-house. Getting help in the form of a fresh set of eyes would be very informative from a crisis-solving point of view. Financial advisers are adept at solving cash flow issues that are stifling the growth of an organisation. Their insights can be useful in a crisis scenario that requires you to make hard choices, as well. Trying to make it by yourself and not asking for help could be an unsound decision to make.
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When going through a financial crisis, it is critical to make sure employee salaries, credit payments and invoice payments can be met. Failing to do so would exacerbate the crisis and make it harder for you to keep your company afloat. Hence, a priority should be given to having liquid cash at hand that can be used to generate funds to paper over the cracks. The most important thing is to not lose employee confidence, as their belief in the system that you have in place is the very soul of any functioning organisation.
Borrowing to Solve a Financial Crisis
It could be possible that the problems you are facing at this point are transient in nature. As you set up the next sales cycle, the income generated can easily float your company out of the crisis that it is facing. In this context, it might not be a terrible idea to borrow money to ease through the current deficit. At the same time, the proposition of taking credit from banks or other financial institutions is a risky one simply because of the high-interest rates these places employ on the borrowed amount. Not borrowing money is always the safer and sustainable option to follow, when struggling through a financial crisis.
A deficit in money from a business perspective is always dire. These problems, while not unsolvable, often pose tremendous challenges that may force bad decisions. Making even decisions that are intelligent and based on long-term sustainability will go a very long way in getting over a financial crisis. KredX, India’s leading invoice discounting platform, is an effective option for any ailing business that is facing a cash crunch. We help businesses gain quick access to working capital in 24-72 hours by selling their unpaid receivables while providing investors with an opportunity to earn low-risk high returns through a unique short-term investment. The creation of working capital that KredX helps with can be a valuable instrument of economic rejuvenation for any struggling business. The growth models that can be achieved through invoice discounting process offers a debt-free alternative that can keep your company out of traditional debt traps.