Dollars & Sense
How Expediters Can Effectively Navigate Cash Challenges in Today’s Market
In the early weeks of the COVID-19 crisis, many expediters have been staying busy.
But after the initial panic buying and need for urgent deliveries slow down, will you have enough cash to get through a potential lull?
Or if, God forbid, you test positive for the coronavirus and need to self-quarantine, unable to earn revenue for the next two to three weeks, what’s your cash strategy to keep your business afloat?
As of this writing, no one knows when the U.S. economy will fully reopen and get back to some sort of normalcy. But you still have a business to run with bills to pay.
So, how can you effectively manage your cash to survive the market uncertainty? Here are five tips.
#1. Be Proactive
In a crisis, it’s human nature to want to stick our heads in the sand. But resist this urge.
Get an accurate picture of your cash situation.
One way is to create a spreadsheet that adds all the available cash you have right now—checking and savings accounts, money market accounts, brokerage accounts, available balances on your credit cards, and so forth.
Then project your upcoming expenses in two-week increments—the next two, four, six, eight, or whatever number of weeks you want to look at.
Now, run a worst-case scenario. If you didn’t earn any income but continued to pay your bills on time, how long would it be until you run out of cash?
If you can last eight weeks or longer, you might be able to take a defensive approach where you look for smart ways to cut expenses to make your cash go further, but you’re not in panic mode—at least, not yet.
In this case, you would keep your eye on your cash situation daily and adjust your approach as necessary.
But if it looks like you’ll be in trouble in the next two to four weeks, you’ll need to act more aggressively to “stop the bleeding” by finding sources for new cash, cutting expenses, and working with vendors and lenders for help to defer payments.
#2. Tap into the CARES Act provisions.
In a recent EO article, “The Expediter’s Guide to the $2-Trillion COVID-19 Stimulus Package,” we break down 10 provisions in the Coronavirus Aid, Relief, and Economic Security Act (a.k.a CARES Act) that could help you tap into cash you might qualify for.
But, in this article, I’m going to highlight two points from the CARES Act:
- Set up direct deposit to receive the Economic Impact Payments. Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child. But if you're not already set up with the IRS for direct deposit, go to https://www.irs.gov/coronavirus/economic-impact-payments to get that started. This way, you’ll receive the payment several weeks sooner than waiting on a paper check to be mailed to you.
- Apply for the Paycheck Protection Program (PPP). This program provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. This applies to you even if you’re a sole proprietorship, independent contractor or self-employed. For a deep dive into the PPP opportunities for Expediters, check out Frank Rebelo’s video on The Trucking Couple Youtube Channel here: https://www.youtube.com/watch?v=S1AJ2OSd3gY.
#3. Consider credit card balance transfers.
If you have good to excellent credit (which Bankrate.com defines as a credit score of 670-850), you might qualify for a credit card with 0% interest offers on balance transfers for 12 to 21 months or more.
If you can transfer your existing high-interest credit card balances to cards with 0% interest offers, you'll be able to reduce your monthly finance charges—and minimum payment—to help improve your near-term cash flow.
And, as your cash situation improves, the 0% offer cards enable you to pay down your balances much faster until the offer expires. For more information, go to https://www.bankrate.com/finance/credit-cards/todays-best-credit-cards/.
#4. Look for savings with your personal auto insurance policy.
Review your policy with your agent to uncover potential opportunities to save money.
For example, one commonly overlooked opportunity is car storage coverage. So, if you’re out on the road for several weeks to months at a time, and your personal vehicles are parked at home, you might consider car storage coverage for those vehicles. This could the premium on a vehicle by as much as 60% to 80% during the storage coverage period. And then, when you anticipate needing to drive the vehicle again, you would put the full-coverage back on the vehicle.
Contact your agent to determine what options are available with your policy. Here's an excellent resource to learn more: https://www.thezebra.com/auto-insurance/coverage/what-is-car-storage-insurance/.
#5. Consider personal auto payment deferral, if available.
If you’re still making loan payments on personal vehicles, this might provide some relief. Certain lenders are offering payment deferral programs—for as long as 120 days in some instances—in response to the COVID-19 crisis.
To see if your lender is offering a payment deferral program, check out Credit Karma’s updated list here: https://www.creditkarma.com/advice/i/coronavirus-auto-loan-relief/.