Financial Consultant & Coach
As South Africans, we are used to facing multiple challenges and conquering those challenges. We are warriors. We are strong. We are survivors. We were hit hard but we will fight this. We will come out stronger than before.
Ronel Jooste CA(SA)
Director at FinanciallyFiTLife
and author, speaker and radio talk show host
Cash flow is of the utmost importance during this time. Limit any expenses to the absolute minimum. Review your monthly expenses for the past couple of months and classify those as essential (have to have them to survive) or non-essential expenses (don’t need them to survive). Find ways to reduce the essential expenses as far as possible − that is, implement strategies to save on water and electricity, buy a cheaper brand of food items, etc. Cut the non-essential expenses (subscriptions, additional cell phone contracts, entertainment, etc) completely or defer them to a later stage. Keep in mind that you cannot simply stop paying contractual expenses or debt repayments. Negotiate with the bank, finance provider, service provider, etc, and understand the terms and conditions as well as any notice periods or penalties involved. Any missed or late payments with regard to contractual agreements or debt repayments will negatively impact on your credit score.
Ensure you get any cash in as quick as possible; that is, invoice more regularly, offer a discount for early payments, and add a payment link to the invoice to make payment easier. Extend any creditor payments as far as possible. Negotiate favourable repayment terms with suppliers or creditors.
Be conscious of the fact that your clients and customers are most likely struggling financially, too. Now is the time to show them that you care and want to retain them as clients or customers. You want them to survive to keep supporting your business. Offer them a discount; if you usually charge the full amount upfront, ask a deposit upfront with the remaining balance due on delivery or once you have completed the service/project; consider to offer them repayment terms for bigger amounts due to assist them with their cash flow. However, make sure you offer these to good-paying clients and also make sure you don’t end up in serious financial difficulty as a result.
Now is the time to spend sufficient time on managing your money and analysing your financial position. Obtain all the necessary information and do calculations if required to make good and informed financial decisions. Start building an emergency fund if you don’t have one or you have used it during this period. Review your business model and try to diversify your business lines/offerings/products to reduce risk in future. Look for opportunities to change the way you do business in order to adapt to the ‘new normal’. Most importantly, don’t give up − we will survive this …
The Impact
We were all looking forward to 2020. It was earmarked to be the ’20-plenty’ year. A year filled with great expectations, abundance, growth, achievement and joy. The outbreak of COVID-19 brought those expectations to a sudden halt. It almost feels unreal that a virus can have this significant impact on the entire world. The world is in lockdown mode. No more travelling, schools and multiple businesses are closed, employees work from home, big events are cancelled, etc. Many entrepreneurs are left stranded with limited or no income. The impact of COVID-19 on the economy, businesses and individuals is phenomenal.
