Israeli Financial Expert Offers Crisis Management Tips for Businesses
Translated & summarized from NEWSru Israel by baba
Israeli financial consultant Liza Bakhrakh advises businesses to manage cash flow meticulously during crises by tracking income and expenses, separating tax funds, and critically evaluating recurring costs. She emphasizes that loans should be a last resort, used only after understanding the financial deficit and having a repayment plan.
The story in 6 lines · by baba
- Businesses must manage cash flow, not just revenue, during crises.
- Track all income and expenses with specific dates.
- Separate tax funds into a dedicated account.
- Review and cut non-essential recurring expenses.
- Loans should be a last resort, part of a financial plan.
- Plan finances at least three months ahead.
Businesses facing economic downturns should prioritize cash flow management over revenue size, according to Israeli financial consultant Liza Bakhrakh. She emphasizes that a clear understanding of incoming and outgoing funds, along with meticulous planning, is crucial for survival.
Bakhrakh advises business owners to create detailed spreadsheets tracking all expected income with dates and all mandatory expenses with their due dates. This includes distinguishing between actual profit and the balance in a company's account, which may include funds earmarked for taxes and other obligations. She notes that in Israel, irregular payments like VAT, advance income tax, and National Insurance (Bituah Leumi) can exacerbate cash flow gaps.
A key strategy recommended is to separate funds for taxes into a dedicated account as soon as they are received. Bakhrakh also stresses the importance of regularly reviewing all recurring expenses, identifying those that do not directly contribute to revenue generation or risk reduction, and cutting them. She categorizes expenses into three groups: those that bring in money (like advertising and staff), those that reduce risk (accounting, insurance), and those that do neither, which are candidates for elimination.
When considering loans, Bakhrakh cautions that they should not be seen as a cure-all. Instead, businesses must first understand the root cause of their cash deficit, project when positive cash flow can be restored, and determine how the loan will be repaid. She suggests exploring alternatives like negotiating payment deferrals with suppliers or tax authorities, and investigating government-backed loan programs for small businesses.
Bakhrakh also recommends proactive measures to increase income, such as following up on outstanding client payments, offering existing clients additional services, and reviewing pricing to ensure it reflects current costs. She advocates for financial planning at least three months in advance, allowing businesses time to adjust strategies, manage expenses, and accelerate income collection before a crisis point is reached. The ultimate goal, she states, is to identify financial problems before they impact the bank account.