While the government is working on the process to get money to small to mid-sized companies and individuals, companies and individual’s bills are becoming due. The uncertainty of the length of time that most of us may be able to comply with the Family First/Extended FMLA time frame has most of us wondering if we will have a business after the crisis. Even with the option of businesses with less than 50 employees applying for an exemption based on their inability to pay their employees according to the regulations, the actual qualifications and criteria have not been communicated.

To be proactive, many small companies decided to offer their employees the opportunity to work from home at least a week ago and now many of us are under a “Stay Home, Work Safe” mandate and are experiencing a lull in revenue. Employers want to keep their employees and do what is necessary to keep them on payroll, but we all have to be realistic and use good judgement.

In an effort to mitigate cash shortfalls, I started to brainstorm on how my clients, other businesses, individuals, and myself could create their own immediate cash reserves. Even those with lines of credit, may or may not be able to draw on their lines due to the overwhelming number of requests. Although businesses with fewer than 500 employees will be refunded the cost of payroll for sick leave required under the new FLMA extended bill via permissible payroll taxes, there may be a shortfall in the tax escrow account to pay your employees or to pay yourself to maintain your business or household.

Therefore, small business owners should be proactive with creating their own emergency cash reserves to help fund payroll and business expenses until the process to request governmental funds are clear or at least until the funds are deposited into your account. Here are some tips to consider to build your cash reserves:

• Request extensions/forbearances on loans (i.e. car, home, personal, business). Some companies are offering extensions of 30 days or more.
• Businesses with current SBA disaster loans are extending payments until December 31, 2020. Contact the SBA for non-disaster related SBA loans. (SBA.gov).

• Contact your credit card providers. Many credit card companies are offering to skip at least one payment.
• Contact your property manager or property owners to request to defer payments or accept a partial payment (rent or leases/business or personal). There is temporary stay on evictions.
• Contact any vendors/payables and request deferments or a change in terms.
• Offer discounts to clients to collect your accounts receivables timelier (i.e. be aware of their ability to pay).
• Consider and research factoring or selling your accounts receivables.

• Borrow from your 401K and attempt to pay it back prior to penalties/taxes being assessed. If you cannot repay it prior to taxes being assessed, the Disaster Relief Bill includes Retirement Plan Distribution and Loan Options for retirement and IRA participants. This plan allows participants to avoid the 10% tax on early distributions; include the qualified disaster distributions in income over three years; repay loans over a longer period of time; repay distribution within three years, borrow more funds as a plan loan. See https://www. irs.gov/retirement-plans/disaster-relief-for-retirement-plans-and-iras for more information.
• Re-visit the perks you offer your employees and see which ones are used and which are not. It may be a great time to cut costs here or reacquaint your employees to the perks so they can take advantage of them to ease their stress (i.e. online training, EAP, telemedicine, financial literacy, etc.).
• Re-evaluate services you subscribe to. If they are not a necessity, call the services to see if you can pause or cancel services (i.e. office phones, extra business cell phone, water/coffee delivers, cable tv, etc.).
• Request credit line increases or draw on credit lines. If you don’t need it, replace the funds after the crisis. What’s the worst thing that can happen…your credit score increases?
• Reduce your payroll burden by implementing TWC’s Shared Plan. You are able to reduce employees’ pay 10%-40% and the employee is eligible to collect unemployment benefits. This is a good option to be able to reduce payroll and possible keep your employees. For more information, go to https://www.twc.texas.gov/businesses/shared-work .

Please note that these tips are just my suggestions, but I hope the tips are helpful and ignite creative thought on how you can take control of your overhead and reserve your cash.

I would seriously consider creating an Excel spreadsheet to run good, better, best scenarios and the financial implications of each (be sure to include any savings generated from deferments/forbearances, skipped payments, and negotiated partial payments as reserved cash. Try it for your personal budget as well.

If you would like to schedule a FREE 15-minute consultation, to discuss how good, better, best options affect your employees or your ability to retain them, please give us a call at 713-999-1205 (option 1) or visit: https://www.smarterhrsolutions.com/schedule-consultation/.

Stay safe!