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Kenney is the Chairman of FPAM JOHOR CHAPTER and also licensed financial planner of Phillip Wealth Planners Sdn Bhd. He can be contacted at kenneykhew@icloud.com. FPAM JOHOR CHAPTER is NGO and non-profit organisation that create financial planning awareness to members as well Johor state residents.

- Advertisement -RESHAPE

During these MCO & RMCO period, a lot of SMEs are facing cash flow problems due to shut down of businesses. This is because of no income during this period and being unable to pay for company’s operation cost such as staffs’ salary, suppliers’ debt and etc.

According to a recent survey by Bizsphere that only about 33.3% SMEs have three months buffer for survival whereas about another 37% SMEs have four months to standby funds in order to sustain for emergency purpose.

The following are some personal advice to the SMEs according to the formula of the word of RESHAPE during RMCO:-

R. Reserve

You as the boss or director of a company need to calculate your company reserve. In other words, you need to find out how much your company’s cash is on hand. It will be good if you have enough cash to sustain your company operation cost for at least six months. The purpose of it is mainly for emergency use.

E. Employee productivity

You need to check your staffs’ productivity so that the company can operate in an effective state. All systems from machine production to staff delivery are important in this context. All must be productive in order to make sure company can meet the demands of the clients. If not, you need to amend their remuneration at the same par as their productivity level. Think of a way to increase the staffs’ other areas of job scope. For example, Total Quality Management concept is important.

S. Short term financial obligation

You need to check how much total monthly financial obligation to bank in. For example, the director’s car installment, factory rental, utility bills and etc. Other crucial matters are supplier debts that need to be paid off. I would like to suggest you to open three categories namely monthly supplier, monthly company costs and monthly bank cost. Therefore, you as the owner must know very well all these costs that need to be paid off every month.

H. Healthy cash flow

You need to check your company’s cash flow in order to find out positive or negative cash flow in order to cover your company’s monthly operation costs. Your accounts department must send out notices in time by emailing or messaging to your customers for prompt (debtor) payment.

A. Asset

You need to calculate all your current assets or long term assets during this critical time. Current assets such as Fixed Deposit, Money Market account in unit trust fund and etc. You need them to settle your short term financial obligations for the continuance of your business. Likewise, total long term asset also needs to be recalculated. Another important thing many SME owners forget about is the ‘keyman’ of the company. Without the keyman, your company’s operations may be in trouble. Therefore, do consider to buy insurance plan to cover the keyman.

P. Profit and loss account

You also need your account manager to come out with Profit & Loss statement so that you can clearly see the types of expenses incurred every month as well as income received. Thereafter, you need to cut off unnecessary expenditure or expenses, for example entertainment, gifts and incentives. In contrast, your account department should focus on chasing debtors or amounts owed and do not take the excuse that payments will be repaid after the MCO period because what if the MCO gets extended?

E. Electronic environment

You as the director or owner of your company should introduce electronic system to all your staff so that you can monitor them by finger click anytime and anyplace. You need to know sales or earnings figure, total cost per month, profit per month as well as cash flow in your account. In other words, you need to find one software or app as one stop work place solution.

Log on to www.smartfinance.my to learn online financial planning education at home during RMCO period in order to enhance your financial planning knowledge.

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