How to Prepare Your Business for the Second Lockdown

 

As Ontario faces another lockdown on Boxing Day, businesses have a short period of time to prepare for the financial health of their operations and for the wellbeing of employees. While the lockdown is certainly going to be financially taxing on many SME's, the silver lining is that this is not the first time businesses have been through the challenges of either closing completely or operating with restrictions in place. 

If you haven't already, now is the time to lean on your experience over the last year to ensure that you are as prepared as possible for the second lockdown. Here are five tips to help you do just that:

1. Look back at your response to the first lockdown

A successful business is introspective. It's important to look at what went well, and what didn't during the first lockdown and make changes accordingly this time around. Keep in mind that what went well from your perspective may differ from others. Take the time to talk to your employees, partners, suppliers, vendors, and customers to talk about what worked and what you should do differently.

2. Expect and anticipate shipping delays

There have been more shipping delays than usual this time of year because of increased online holiday orders as consumers bunker down and stay home. That may mean that essential business goods or shipments out to customers are taking longer to arrive.

Be patient and remember that essential workers in the shipping and trucking industries are working harder and putting in extra shifts and long days. Despite their efforts many companies are still struggling to keep up with demand and make deliveries on time.

From delivering essential food items to the COVID-19 vaccine, those in the trucking and freight industries are giving up time with their own families and putting themselves at risk. This essential and thankless job is keeping Canadians fed, comfortable and secure and allowing business in Canada to continue. The best way to deal with these delays is to know the reality of the situation and place orders well in advance of when you need them.

3. Identify bottlenecks

Procuring and delivering goods may be one bottleneck to deal with during lockdown, but are there others? Common bottlenecks that can put your business at risk include staffing and cash flow.

Are you ready to cover shifts of employees who may be unable to come to work because they've got symptoms or are waiting for a COVID test result? Have a plan in place and trained staff on standby just in case.

4. Get Your Finances in Order

Many businesses across the country have been relying on government subsidies and programs to continue to operate. That may help you get through the lockdown, but it's not a long-term strategy. For businesses with reduced hours (or those who will be closed), take advantage of the time afforded you and get your finances in order. In an article for the Chartered Professional Accountants of Canada, business consultant Eitan Dehtiar suggests that businesses "look at an overall cost reduction plan, trying to transition as many fixed costs as you can to variable costs so that you have the ability to turn off the tap and adjust."

In addition to reducing costs, advice from EY (formally Ernst & Young) includes evaluating short-term liquidity and closely monitoring cash flow to stay on top of potential shortfalls.

5. Remember, Cash is Always King

Cash flow is always critical to the health of a business, but even when business is good, if customers don't pay what's owed, things can go sideways. Even businesses that have never missed a payment with their bank, like Carl Gatt, owner of BLB Transport Group, may be denied credit when it's needed.

Earlier this month, FreightWaves interviewed Gatt, who shut his trucking business down after a financing dispute with his lender, RBC Bank. Gatt, who is planning on retiring, ended up paying his drivers from his own personal savings after his business accounts were shut down as the dispute went to court.

Luckily for Gatt's drivers, RBC Bank and the courts agreed that he could sell his business to Ready Go, who agreed to buy the company's assets and hire most of Gatt's employees. "When I met Carl, I saw how much he cared about his employees," Ready Go owner and General Manager Ajay Virk told FreightWaves, adding that "we didn't want to see these guys losing their jobs."

While Gatt's story ended on a somewhat happy note, this isn't always the case. Now, more than ever, it's important to get a hold of your cash flow, ensure your accounts receivable are up-to-date, and have a plan should any government programs or subsidies you're using disappear.

Relying on your bank for credit is risky. Instead, consider invoice factoring as a safer way to ensure your expenses are covered. With invoice factoring you'll get paid instantly for your invoices so you can pay your employees and cover expenses. Give the team at J D Factors a call to learn more. Our contactless process means we're able to help your company get control of your cash flow, even during the lockdown.

 

 

 

Business Loans vs. Factoring: Why is Factoring a Good Option?

Many businesses are seeking loans right now to help deal with the challenges of COVID-19 and the quarantine. If you’re looking for financial solutions, a bank may be a great option, but it isn’t your only option. Factoring may be a more flexible and sensical option for your business right now, depending on your specific needs.

 

How is Factoring Different?

While a traditional business loan gives you a set amount of money to be repaid over time at a specific rate, factoring is a much more variable financial tool. With factoring, you send your invoices to your factoring company and not your clients. The factoring company pays you for the invoice right away and worries about getting the money from your client.

At J D Factoring, we offer non-recourse factoring, which has an extra step. Depending on the circumstances, if your client fails to pay your invoice, we don’t ask you to return the money that we already gave you for that invoice. This gives you some risk protection from your clients’ own financial woes. During COVID-19, when many companies will face challenges, this risk protection is absolutely critical.

Less History Required

When you apply for traditional financing options through a bank, you may find yourself turned away because you are too new and do not qualify for financing. That’s understandable from a bank’s perspective, but factoring companies have significantly more flexibility in this regard. We can often take on new businesses that wouldn't otherwise qualify for a traditional bank loan.

More Than Credit

We take much more than credit into account. While credit is a factor for your application, we don’t make our decision primarily based on your credit. This process is especially beneficial for businesses that have begun recovering from a spell of financial hardship, or who have recently faced difficulties.

Banks are Busy

Thanks to restrictions on businesses during COVID-19, many companies have had to reach out to banks for business loans and other financial support. As a result, banks are busier than usual. Plus, most major banks are focusing on their current clients right now, which may mean that you need to wait much longer to even find out if you qualify for a business loan.

That wait can be an even larger problem in these financially uncertain times, especially if your cash flow is strained. You may be missing out on business opportunities, or even on the opportunity to fulfil essential goods and services that people need during COVID-19. In that case, you may want to reach out to the team at J D Factors. We can process your application faster than most banks can right now.

We Help Banks, Too!

That said, J D Factors can also help banks through this challenging time. If you’re facing huge delays, like taking three or more weeks for a process than normally takes one week, consider referring clients that are unlikely to be approved for a loan at your institution to us. This referral will reduce your internal workload, increase customer satisfaction with your institution, plus we pay a commission on clients you refer to us!