When natural disasters like Hurricane Helene hit, businesses face not only physical damage but significant operational and financial challenges. In Tampa and surrounding areas, many businesses are experiencing disruptions due to flooding, making it difficult to continue normal operations. Managing cash flow during this time becomes a critical priority to keep your business afloat until things return to normal.

This guide outlines practical steps to take when your business is facing a cash flow crisis due to weather-related disruptions.

1. Assess Immediate Financial Impact

The first step is to evaluate the immediate damage to your financial position. This involves understanding your current cash balance, unpaid receivables, and fixed expenses. Consider:

• Outstanding Invoices: Identify unpaid invoices that can be collected quickly. If customers have also been impacted by the disaster, reach out with flexible payment options to incentivize faster collections.
• Fixed and Variable Expenses: List out recurring expenses like payroll, rent, utilities, and loan payments, alongside discretionary spending that can be temporarily reduced or deferred.
• Insurance Coverage: Review your insurance policy, especially if you have business interruption coverage, to see what support is available for lost revenue or increased expenses.

2. Develop a Cash Flow Forecast

Building a realistic cash flow forecast during a crisis is essential for maintaining visibility into your financial health. This forecast will help you anticipate shortfalls and make informed decisions. Here’s how to build one:

• Identify Cash Inflows: Include expected payments from receivables, insurance claims, and any emergency funding you’ve applied for, such as SBA disaster loans or local grants.
• Project Cash Outflows: List your fixed and variable expenses, including any recovery costs for repairs or replacement of damaged assets. Be conservative with your estimates to avoid surprises.
• Develop Multiple Scenarios: Create best-, worst-, and middle-ground cash flow forecasts. In your worst-case scenario, assume delays in insurance claims and prolonged operational downtime, while your best-case forecast should reflect quicker-than-expected recoveries.
• Regularly Update the Forecast: As your situation evolves, update your forecast frequently. This will allow you to track your financial position more accurately and make adjustments as needed.

Want a downloadable template? Here's the link: Rolling Cash Forecast

3. Accelerate Receivables Collection

In a cash flow crisis, it’s critical to bring in cash as quickly as possible. Here’s how to speed up collections:

• Offer Discounts for Early Payment: If your clients are able, incentivize them to pay sooner by offering a small discount for payments made within a shorter time frame (e.g., 1-2% off for payments within 10 days).
• Negotiate Partial Payments: For customers facing their own financial challenges, offer the option of partial payments now, with the balance to be paid later. This helps you bring in some cash while giving them flexibility.
• Frequent Follow-Up: Stay in regular contact with customers regarding outstanding invoices. A gentle but consistent follow-up can make a significant difference in getting paid faster.
• Simplify Payment Methods: Make it easy for customers to pay you by offering multiple payment options, such as credit cards, ACH transfers, or other online payment methods.

4. Prioritize Critical Payments

Not all expenses are created equal, especially in a cash flow crisis. You’ll need to prioritize where your cash goes. Focus on:

• Employee Payroll: Keeping your team paid is crucial for morale and ensuring that your workforce is available when operations resume.
• Key Suppliers: Prioritize payments to critical suppliers that you need to maintain essential operations, particularly if they are vital to keeping your business running during recovery.
• Fixed Overheads: Certain expenses, like rent or utilities, may need to be paid to prevent disruption to services, but as mentioned earlier, negotiate deferments where possible.
• Insurance Premiums: Ensure you stay current on your insurance payments, particularly if you expect to make claims related to business interruption or property damage.

5. Communicate and Negotiate to Delay Obligations

It’s equally important to manage your outflows. When you face cash constraints, open communication with your creditors, suppliers, and lenders is key to gaining flexibility. Here’s how:

• Suppliers and Vendors: Contact your suppliers early and explain your situation. Most will be willing to work with you by extending payment terms or offering payment plans. Building a strong, honest relationship with your vendors during a crisis will help you negotiate better terms.
• Lenders: Reach out to your bank or loan providers to explore short-term relief options, such as loan payment deferrals or temporary forbearance. Many lenders offer disaster recovery programs or lines of credit in response to major events.
• Landlords and Utilities: Ask for temporary deferment on rent or utility payments. Some landlords are willing to waive or reduce rent for a limited time, and many utility companies have special programs to assist businesses affected by natural disasters.

6. Access Emergency Funding

If your cash flow forecast shows significant gaps, consider tapping into emergency funding options:

• SBA Disaster Loans: If your business is in a federally declared disaster area, you may be eligible for low-interest loans through the SBA. These loans can help with working capital or repairing physical damage to your business.
• Lines of Credit: If you have an existing line of credit, this may be the time to draw on it. However, avoid overextending yourself and ensure that you’ll have a plan to repay once your business recovers.
• Government and Local Grants: Check with local and state government programs that may offer grants or other relief for businesses affected by the disaster. Community organizations and chambers of commerce often provide information on available resources.

7. Make Use of Business Interruption Insurance

If you have business interruption insurance, now is the time to file your claim. Business interruption insurance can help with:

• Lost Income: This coverage compensates for income your business would have earned if normal operations had not been disrupted.
• Operating Expenses: It may cover necessary expenses like rent, utilities, and payroll while your business is closed.
• Temporary Relocation Costs: If you need to relocate your business to continue operations, business interruption insurance can cover those expenses as well.

8. Communicate Transparently with Stakeholders

During a cash flow crisis, communication is your best tool for managing expectations and securing flexibility from those you owe. Be proactive in discussing your situation with:

• Customers: Keep them informed about any delays in service or product delivery and let them know when you expect to return to normal operations.
• Suppliers and Vendors: As mentioned earlier, communicate early and often with your vendors to renegotiate terms or extend payment deadlines.
• Employees: Your team will be concerned about their jobs and income. Open and honest communication can help reassure them during uncertain times.

Managing cash flow during a business disruption caused by severe weather, like Hurricane Helene, can be daunting, but taking a proactive approach will give you the best chance to keep your business afloat. By developing a cash flow forecast, accelerating receivables, prioritizing payments, and negotiating with creditors, you can ensure that your business weathers the storm and is ready to rebuild when the time comes.

At The William Stanley CFO Group, we’ve seen firsthand how critical cash flow management is in times of crisis, and our community's resilience is what drives us. Navigating these challenges takes planning, flexibility, and the right support, and with those elements in place, businesses can emerge stronger on the other side.