Cash Flow Management During a Downturn

Simply said, cash is the lifeblood of business. Cash flow is the movement of money in and out of a business. The importance of cash flow cannot be overstated - without a proper supply of cash, a business runs the risk of liquidation.  

In a difficult time, special attention must be paid to cash flow. Fortunately, there are tools to help identify and alleviate a variety of cash flow problems that are applicable both during the COVID-19 pandemic and as good business practices during downturns.  

All businesses need to create or review and adjust cash flow budgets. Get an understanding of your cash flow moving forward. A NH SBDC business advisor or other financial professional can assist you with using a cash flow projection tool. If your business is impacted by the pandemic, multiple scenarios might have to be run. Remember, information is your best friend! Don’t run away from the data; use it to inform your decisions.


  • Given the uncertainty over COVID-19, business owners should carefully consider any investments in capital equipment until the current situation improves.
  • Ensure that your financials are kept up to date so that you monitor profitability, overheads, stock levels, and debtors and creditors balances on a timely basis.

  • Review the company’s existing expenses by going through each line item on the income statement. Cut back on items you might not need during this downturn.

  • Review owners’ and managers’ salaries to see if they can be reduced until the business returns to normal.  

  • Talk to vendors about delaying payments as well as converting receivables to cash, when possible.  

  • Many businesses are experiencing supply chain disruptions due to shortages in raw material and component parts. Explore alternative supply chains with a view to increasing strategic stock levels as a buffer against the potential impact of a prolonged or much broader supply chain disruption.  

  • Take steps to increase sales of slow-moving or perishable stock to generate more cash.

  • Cut back on personnel that is not needed. The unemployment compensation program has been expanded to be inclusive of new situations, including the expansion of the benefits to those who are self-employed.  

  • Discuss your situation with your lending institution. Honesty in this situation is your friend. Banks have been deferring loan payments until business is back to “normal”.

  • If you are affected by the pandemic, apply for the SBA Economic Injury Disaster Loan program (EIDL). The terms are very reasonable; 3.75% fixed, 12 months of deferred payments (no payments necessary for the first 12 months), no cost to apply, no down payment, and amortized up to 30 years. Start here       

  • If you are in a leased location, discuss relief on rent with the landlord. 

    • Try to get some rent abatement over the next few months until the pandemic effects are

    • Try to get rent payments delayed toward the back end of the lease. The same holds true for an equipment lease agreement.

  • It’s important that your tax obligations, including any special considerations for payroll and so on, are paid correctly and on time.


Contact your NH SBDC business advisor for more in-depth help or find your SBDC region and submit a request for service.

If you are a small business owner and you find time on your hands due to the crisis, or you need to expedite learning about a new topic for self-development via quality content, NH SBDC offers multiple free online classes.