3 Financial Steps Small-Business Owners Should Take Right Now An industry expert shares how to secure cash flow and keep operations running during difficult times.

The nation's small businesses are struggling, and there's no clear picture of when the current crisis will be over and things will be back to normal. It's a tough situation for any company to be in, and even a $2 trillion stimulus package won't be able to alleviate the worries for many small businesses yet.

Ben Richmond, U.S. country manager for accounting-software platform Xero, shares the three financial steps small-business owners should take to get their companies in the best possible position. Read on for his tips.

Optimize cash flow

"We're in unprecedented times," Richmond says. "Businesses will really need to put their soft skills to use. A lot of the techniques they need to use — which I'll call "peacetime tactics' — they need to apply in a tailored manner, because their customers and suppliers are also going through a really tough time."

When you approach customers about money that's owed to you, be as empathetic as you can. But just because these conversations are uncomfortable doesn't mean you can avoid having them.

"When businesses are in a tough spot and owe multiple people money, it's the squeaky wheel that gets the oil," Richmond advises. Proactively reaching out to customers and collecting bills that are past due could be the difference between your business surviving or failing right now. Remember, when we do eventually come out of this crisis — which we will — the same customers you're approaching now will probably be there in the future. Be firm but fair.

Although many parts of the country are shut down, other areas are still open for business, or your business might be deemed essential. If so, you need to rethink your payment terms. Or as Richmond puts it, "As you're taking on new business, you need to think about their financial positions.You might want to look at requiring prepayment or retainers or shortening your payment terms."

After you focus on collecting money that's owed to you, you'll have a better idea of what type of cash will be flowing your way. That will help you start a collaborative dialogue with suppliers you owe money to. "If a business closes, the suppliers generally don't get any payment," Richmond says. " They'll want to work with companies that are being open, transparent and show confidence through having a plan."

Build three forecasts

"If you haven't done it before, it can be pretty daunting," Richmond concedes, though he also notes, "There are a lot of great cloud-based bookkeepers and accountants who can work remotely right now."

Whether you hire someone or do it yourself, you want to create three forecasts: an optimistic, best-case one; a realistic likely one; and a worst-case one that imagines what will happen if customers who owe you money go out of business and that this crisis drags on for several more months.

"It's an ever-evolving situation," Richmond says. "This thing is changing almost by the hour. Once you've got those scenarios, you'll be in a position where you can see if you have a surplus or a shortage. Then you can work with your team to see how big [the shortage] is and how you can solve it."

Plan for a cash flow shortage

As Richmond acknowledges, it's imperative to make a plan to minimize expenses as much as you can to cover a shortage. Where you can, cut discretionary and capital-intensive spending. "You want to understand what the fixed costs you can't avoid are, things like rent," Richmond says. "Have an open conversation with your landlords and see if you can negotiate better terms or rent holidays. Landlords will want to support people who have a plan."

Although it's difficult, you need to go through all your expenses and rank them in order of what you can cut first and what you'd like to avoid. "There is a point where you'll have to impact people," per Richmond. "And you want to avoid that as much as possible right now and support them."

Many businesses will be able to cover their shortages through federal funding from the Small Business Administration, which offers low interest rates and generous terms. Applying for these loans does take time and resources, though — Richmond estimates business owners who haven't done it before could spend up to 30 hours filling out all the paperwork. If you can, hiring a remote accountant or bookkeeper again could help ensure you follow all the rules and don't waste precious time and resources.

Though SBA loans are the easiest way for businesses to get relief right now, there are other options. "Every business is in a different position," Richmond says. "Have an open conversation with your bank. Some businesses will have the benefit of family funds. I highly recommend, if you do go down that route, that you look at it commercially and dot all your i's and cross all your t's."

Another option is the Paycheck Protection Program for small businesses, which is authorizing $349 billion in loans that go towards employee retention and covering expenses. Applications opened Thursday, April 2, so prepare to apply as quickly as you can.

The world is in an unprecedented situation right now, but with the right preparation and hard choices, your business should be able to come out of it on the other side.