As South Africans are still processing the news about a 5-level lockdown model, our country’s precarious economy is in the spotlight. Combined with our ‘junk’ status and a volatile rand, many see a bleak economic future. Unfortunately, this financial trifecta will place further pressure on businesses’ survival. Conserving cashflow must, therefore, be a priority for organisations. Although challenging, now is not the time to panic – but rather protect and prioritise.
In the current market, it’s essential to conserve cash for core activities during the lockdown. Potential ways to achieve this are reducing non-essential operational expenses and by utilising financial aids. SARS, for instance, is offering tax relief measures and customs relief measures. One can also apply for Small Business Relief and UIF. There will also soon be government-backed COVID-19 loans available from commercial banks. Payment holidays have also been extended for certain mandatory contributions, such as carbon tax and skills development.
In terms of procurement, more and more companies are turning towards leasing agreements. Instead of using shareholders’ cash or traditional finance solutions to purchase assets that require regular replacement and disposal, a RentWorks facility will alleviate a large cash outlay. With leasing solutions, you transform your acquisition into a sustainable, competitive advantage as it offers lower premiums, reduced administration, and flexible options to best suit your unique cashflow requirements.
Making the most of your assets
Apart from saving money by reducing expenses, there is another answer: injecting cash into your business.
A popular option for organisations who have already purchased IT equipment or business assets is to use the Sale & Rent Back facility from RentWorks. This solution will give you cash back now while you rent your IT assets back over its remaining useful life – providing the benefit of using assets and conserving cashflow. Not only will you ease your financial burden but assist your business in both the short and long term as it stretches your budget and fixes equipment costs.
Planning for uncertain times
Now is not the time for complacency. Businesses must review their business plans, models, and continuity strategies to find ways to protect their finances while keeping core operational activities functional.
Those that adopt a wait-and-see attitude are in the biggest danger. At the very least, organisations must develop 12 – 18-month plans to navigate the unpredictable future. Only by planning for an uncertain future can we give our businesses a fighting chance to have one.