3/11/2020 5:00:00 PM | Commercial

7 Solutions to Help Your Business Navigate COVID-19, Economic Uncertainty

Simple steps can protect cashflow and working capital in challenging times

The COVID-19 virus is just the latest example of how quickly disruption to your business can happen. The current market upheaval in response is a strong reminder of why it’s important to be prepared for economic uncertainty.

Regardless of how well your company is positioned to adjust financially in the days ahead, there are steps you can take even now to make sure you are better prepared to navigate the uncertainty of tomorrow—whatever it may hold.

Below are a few options for your business to consider quickly:


1. Make sure you have trusted backup support.

Banks like Umpqua are well prepared from a planning standpoint to keep your business going when major disruption occurs. The question for many businesses is whether they’ve planned thoroughly enough on their end. If the employee in charge of critical banking transactions is out sick or quarantined, for example, does someone else have system access and authorization to conduct transactions. Given the current volatility of public health, now is the time to make sure there is backup for key employees and that those with essential functions have reinforcements to keep your business going.


2. Prioritize fraud prevention solutions.

Criminals thrive on exploiting crisis situations, which leads to an increase exposure to fraud and cyber theft. There are basic steps you can take to protect your business during this time. Ensuring dual authorization on all online banking transactions such as wires and Automated Clearing House (ACH), as well as exercising vigilance around all urgent email requests for funds disbursement (“phishing”) are good first steps. Positive pay is also a low-cost solution that that helps prevent check fraud.


3. Make payments with your commercial card.

Commercial cards can do much more than cover employee travel and entertainment expense. They can be very useful when supply chains are disrupted. That’s because using commercial cards in lieu of checks to pay bills creates a time buffer on payments—at least 30-45 days, reducing pressure on your cashflow. Setting up a card program with your bank can happen quickly if you don’t currently have one. If payments are being stretched, now is a good time to do it.


4. Move to integrated payments.

One way to both maximize and protect working capital during this time is to move to integrated payments and fully automate the receipt and processing of invoices. All your various payable methods can be integrated into a single payment file for the bank to process. Integrated payments will not only save you time and money, it will reduce the risk of human error and fraud.


5. Remove checks from the payments process as much as possible through ACH.

With ACH, your clients will be able to issue payments online from anywhere, ensuring you’re paid on time in the event of further disruption. You can also issue payroll for your employees electronically, which will help keep your business running smoothly.


6. Diversify supply chains as quickly, but smartly, as possible.

Coming on the heels of the recent trade dispute with China, COVID-19 is adding to the pressure on supply chains, especially those dependent on China. The disruption is delaying the delivery and payment of goods, which is impacting cashflow. If your company has too much China exposure, it’s as critical as ever that you find alternate markets to limit risk. A good commercial bank with international expertise can help you access these new markets quickly and finance them cost-effectively.


7. Consider fixing more of your floating rate debt.

We’re in an environment where swapping floating debt for a fixed rate could make sense. Interest rates are at historic lows and trending downward as a result of the virus. As rates fall, the cost of financing falls with them. Locking in a low fixed rate for new or refinanced loans may provide near-term savings and long-term stability of financing costs. A sophisticated commercial bank should be able to help identify and implement the optimal financing solution.

These financial options are a good starting point for a conversation with your bank. Today it’s COVID-19. Tomorrow it will be another challenge to navigate. In an uncertain economy, now is always the right the time to prepare for your company’s future.