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Six Steps to Optimize Cash Flow During an Economic Downturn

Cash flow can be tricky to manage at the best of times, let alone during an economic downturn.

Dips in demand, supply chain issues and late payments can cause serious problems.

1) Modernize Your Payment Infrastructure

Electronic payment solutions and accounting software can help to shorten your invoice collection cycle and keep cash flowing in nicely.

Cloud accounting software makes it faster and easier than ever to send out accurate invoices.

In fact, for regular or retainer customers you can have your chosen platform automate your invoices for you, so you really don’t have to lift a finger.

Once sent, the software can then keep track of payment deadlines and send out reminders when necessary, or alert you when further chasing up is required.

Meanwhile, electronic payments streamline your customers’ experience and make it easier than ever for them to pay you promptly.

After all, the more difficult and time-consuming it is for customers to pay you, the longer they are likely to put it off.

It’s in your best interests to make it as easy as possible.

2. Maximize DPOs

DPOs – or days payable outstanding – means the length of time it takes you to pay your vendors.

Increasing your DPOs and delaying payment a little can help you hold onto your working capital for longer and top up your accounts before paying out.

However, it’s important to take care not to miss any deadlines or aggravate your vendors.

Don’t maximize your DPOs indiscriminately, either.

Smaller firms in particular may rely on shorter DPOs, so weigh up whether maximizing your DPOs will jeopardize your relationships.

3) Update Cash Flow Forecasts Regularly

Cash flow forecasting is an important step in good cash flow management, but it’s important to update your forecasts regularly for the most accurate results.

This is truer than ever right now, as the global economic climate is shifting rapidly.

You may even want to consider forecasting on a weekly basis.

4) Negotiate Supplier Terms

Negotiating supplier terms can prove enormously helpful when it comes to optimizing your cash flow during difficult times.

Ways to do this include:

  • Extending payment deadlines – this can help you to keep more cash in your business for longer.
  • Negotiating volume discounts – if you are currently in a good cash position but are concerned for the future, a bulk discount could help you to save money in the long run and foster a good relationship with your supplier.

5) Re-examine Your Supply Chain Strategy

If you have been struggling with supply chain disruptions, working with local vendors could help to fix this issue.

Alternatively, if you were working with lower cost vendors who required a larger order, you could benefit from switching to a vendor who charges slightly more per unit but has a lower minimum order and more attractive payment terms – particularly if you have experienced a dip in trade.

6) Involve the Whole Team

Speak to your team about maximizing cash flow and ask them to make it a priority when making decisions.

Even small changes can add up to make a big difference when it comes to optimizing your business.

Encouraging your staff to factor cash flow into their day-to-day decision making is an effective way of ensuring that your business is as cash efficient as possible, and thus help you to thrive despite difficult economic times.


Optimizing cash flow should be a priority for every business right now.

Even those in a good cash position can find room to improve.

Improving your cash flow helps to protect your business against market shifts and the many ripple effects of the Post pandemic era that we can’t yet predict.

Finally, optimizing your cash flow will also help your business to take advantage of #opportunities that come your way as the world recovers, ensuring that you don’t get left in the dust.

Action Steps

If you want to Maximize your Profits and get Cash Flow under control, come and have a chat with CFO Coach today.

We will map out your unique roadmap and help you look for the opportunities to push for a sustainable Cash flow.

Get in touch with me to learn more by SMS on +260967924720 or email to Irfan.Sayed@cfocoach.co.zm or Visit www.cfocoach.co.zm

Alternatively you can choose your preferred date to set up a free 15 minute Power Discovery Call at your convenience by clicking the link – CFO Coach.

Check out other Valuable Insights in my articles page to help you take Action Today!