Could Liquidating Some Assets Save Your Business During A Pandemic?

If your company was heading into financial troubles before the COVID-19 pandemic hit, chances are you could be facing a real dilemma now. You believe in the business, you don't want to lay off your staff but you need to find money fast to stabilise the company.

Cash flow is king for any business and it's easy to fall into issues. Late paying clients are one of the biggest causes of cash flow problems and they can create enormous problems for you. This can lead you to negative cash flow, and that's when things really start to go wrong.  

Your cash flow forecast should have been in place when you launched your business and it should be revisited regularly. It can help to predict your financial future and help you stay ahead of your expenses. Having a strong forecast, however, is not a guarantee your business will maintain good cash flow. 

Before you consider liquidation of assets, you should look at invoice financing. This can help you get through difficult times by providing you with funds to the tune of unpaid invoice amounts. Of course, this will cost the company more money on the long term, serving only as plaster around a deep wound.

Reviewing assets is quite hard for anyone in business. If you have machinery or equipment that costs a lot to run and maintain, you should pull up a list of all the assets you own and review them. Start with the big stuff and then make your way down to smaller items like computers and smartphones.

When it comes to large assets, you need to get tough. Owning multiple properties could mean wasting valuable cash. Speaking to lending companies could enable you sell off your property and then finance it back by applying for a loan. This would give you a massive cash injection and enable you to keep your business afloat. You should also look at the vehicles you currently have. Do you really need all those company cars? You may find that employees prefer to use their vehicles than lose their jobs if the business were to collapse. 

Smaller assets such as computers or electronic devices won't make a huge difference. If you add them all up, however, you may find that you can free up enough to get you through a few more months of lockdown, so be brutal about how much technology you have and what you need. 

Asset finance or refinance can also help you out dramatically with any machinery you own—allowing you to keep functioning but releasing some equity to help you through the tough times ahead. 

It's an excellent idea to talk to a financial advisor and an asset advisor to help you run through your options and highlight any areas where liquidation might work for you. While the concept of liquidation can seem quite scary for any business, it really could be the choice that saves your business.