The pandemic has created a worldwide sense of uncertainty - for business owners, this is a particularly stressful time. Income is fluctuating as COVID-19 impacts sectors in all industries. It can be challenging to navigate budgeting during a tumultuous time when income is not assured. To keep your finances healthy, here are some tips to manage your business’s budget during the pandemic:
Create an emergency budget. Now is the time to prepare for challenging times by cutting costs and setting money aside for unexpected circumstances. An emergency budget is essential for periods of uncertainty; it’s recommended that you create a fund to cover three to six months of regular business expenses. Whenever possible, minimize your spending on optional expenses. These include subscription services, travel plans, and even debt repayment. If possible, reduce your payments to the minimum amounts so that you have more income to use where needed.
Defer your mortgage. Many banks are allowing people to defer mortgage payments during the pandemic. If you have a mortgage for the building your business is in, or your own home, consider deferring payments to free up more income that can be used toward other expenses. Delaying payments is a good way to immediately grant your business more money for necessary expenses.
Consult a financial advisor. Professional counsel from a trusted source can be invaluable during times of financial uncertainty. If your business has a line of credit, you may be eligible for lowered interest rates; inquire at your bank to see if this is the case. This can help with outstanding debts that are particularly difficult to pay at this time.
Check your insurance coverage. See if your insurance covers COVID-19 and business interruption. Interruption insurance functions in two ways: there is earnings insurance, which can pay income during an interruption of operation, and profit insurance, which will pay the typical income of your business until it reaches pre-interruption levels. Comprehensive coverage will cover your business in the event of a pandemic; other types like fire or perils insurance may not. Consult your insurance broker to see if you are covered in the event of a viral disease, or if this condition is excluded.
Seek financial resources and government assistance. Your business may be eligible for government assistance due to lost revenue from COVID-19. There are financial resources available for those in need. Depending on the location of your business, you can apply to programs that will reimburse your business for a percentage of your losses during the pandemic.
Refrain from borrowing money. Only rely on that option as a last resort; accumulating more debt during this time may be difficult to repay in the future. The pandemic has created a landscape of financial uncertainty and insecurity; taking out more money against your line of credit may put your business in a precarious position. If you must take out a loan during this time, research which banks offer the lowest interest rates; many have reduced their usual charges in light of COVID-19.
Invest in critical illness insurance. During a pandemic, insurance for illnesses is of the utmost importance. This type of insurance can apply to both individuals and corporations. It is more likely that you will fall ill when a viral disease is circulating, so consider investing in illness insurance - it will cover your loss of income if you contract COVID-19. You can select coverage from four illnesses up to 25. This benefit will give a tax-free payment to assist with medical care, replace lost income, and repay financial obligations. You can select term critical illness insurance, which is temporary protection (suitable for pandemics), or permanent critical illness insurance, which offers all benefits for a lifetime.
Track where your money is going. Diligently monitoring your business’s expenses and income will save you from unexpected financial hardships. Separate wants and needs when drafting a new budget. While it can be difficult, this is the time to reduce or eliminate all unnecessary spending. Take a closer look at the spending habits of your business. Are there certain services or items that can be given up to save revenue? Track exactly where your money is going to trace any source of non-essential spending.
Be aware of financial fraud. Even during trying times, scammers are searching for vulnerable businesses to take advantage of. Be cautious about strange emails or phone calls promising financial aid or other assistance - it is likely that these are fraudulent. Scammers will prey on fears and any misinformation that is circulating because of the pandemic. Protect your business by being aware of these calls, emails, and text messages.
Preparing for unexpected financial losses is a matter of smart budgeting, investing in insurance, and reducing unnecessary spending. Financial hardships can be harmful to any business. To lessen the losses caused by COVID-19, follow the above financial tips to reduce spending, tighten your budget, and insure your business.
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Create an emergency budget. Now is the time to prepare for challenging times by cutting costs and setting money aside for unexpected circumstances. An emergency budget is essential for periods of uncertainty; it’s recommended that you create a fund to cover three to six months of regular business expenses. Whenever possible, minimize your spending on optional expenses. These include subscription services, travel plans, and even debt repayment. If possible, reduce your payments to the minimum amounts so that you have more income to use where needed.
Defer your mortgage. Many banks are allowing people to defer mortgage payments during the pandemic. If you have a mortgage for the building your business is in, or your own home, consider deferring payments to free up more income that can be used toward other expenses. Delaying payments is a good way to immediately grant your business more money for necessary expenses.
Consult a financial advisor. Professional counsel from a trusted source can be invaluable during times of financial uncertainty. If your business has a line of credit, you may be eligible for lowered interest rates; inquire at your bank to see if this is the case. This can help with outstanding debts that are particularly difficult to pay at this time.
Check your insurance coverage. See if your insurance covers COVID-19 and business interruption. Interruption insurance functions in two ways: there is earnings insurance, which can pay income during an interruption of operation, and profit insurance, which will pay the typical income of your business until it reaches pre-interruption levels. Comprehensive coverage will cover your business in the event of a pandemic; other types like fire or perils insurance may not. Consult your insurance broker to see if you are covered in the event of a viral disease, or if this condition is excluded.
Seek financial resources and government assistance. Your business may be eligible for government assistance due to lost revenue from COVID-19. There are financial resources available for those in need. Depending on the location of your business, you can apply to programs that will reimburse your business for a percentage of your losses during the pandemic.
Refrain from borrowing money. Only rely on that option as a last resort; accumulating more debt during this time may be difficult to repay in the future. The pandemic has created a landscape of financial uncertainty and insecurity; taking out more money against your line of credit may put your business in a precarious position. If you must take out a loan during this time, research which banks offer the lowest interest rates; many have reduced their usual charges in light of COVID-19.
Invest in critical illness insurance. During a pandemic, insurance for illnesses is of the utmost importance. This type of insurance can apply to both individuals and corporations. It is more likely that you will fall ill when a viral disease is circulating, so consider investing in illness insurance - it will cover your loss of income if you contract COVID-19. You can select coverage from four illnesses up to 25. This benefit will give a tax-free payment to assist with medical care, replace lost income, and repay financial obligations. You can select term critical illness insurance, which is temporary protection (suitable for pandemics), or permanent critical illness insurance, which offers all benefits for a lifetime.
Track where your money is going. Diligently monitoring your business’s expenses and income will save you from unexpected financial hardships. Separate wants and needs when drafting a new budget. While it can be difficult, this is the time to reduce or eliminate all unnecessary spending. Take a closer look at the spending habits of your business. Are there certain services or items that can be given up to save revenue? Track exactly where your money is going to trace any source of non-essential spending.
Be aware of financial fraud. Even during trying times, scammers are searching for vulnerable businesses to take advantage of. Be cautious about strange emails or phone calls promising financial aid or other assistance - it is likely that these are fraudulent. Scammers will prey on fears and any misinformation that is circulating because of the pandemic. Protect your business by being aware of these calls, emails, and text messages.
Preparing for unexpected financial losses is a matter of smart budgeting, investing in insurance, and reducing unnecessary spending. Financial hardships can be harmful to any business. To lessen the losses caused by COVID-19, follow the above financial tips to reduce spending, tighten your budget, and insure your business.
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