So here is my situation, I would appreciate any and all advice.
I own a small business, we have over 100 employees and are involved in manufacturing. Our business has been absolutely booming we received large international orders secured by letters of credit drawn on extremely well rated European banks. As of two weeks ago we had 3 million dollars cash in the bank. Accounts receivable of 3.6 million, accounts payable of 4.5 million and a sales backlog of around $12,000,000.
The gigantic backlog is made up of around 4,000,000 of routine business about 30% of which is prepaid and the balance of which is net 30 or net 60. The remainder is a $6,000,000 (43% gross profit) chunk for a state owned corporation in North Africa which is secured by an irrevocable letters of credit drawn on two Major western European Banks. It was placed in December of last year with delivery in June of this year, LoC payments terms are cash against documents. The other order is a 2,000,000 order from South America of which I've received 50% down payment with balance due at time of order, this is due in about a month. Both orders do not seem to be currently in danger of cancellation or missed delivery due to the crisis.
My issue is this: I received about 50k in payments this week on my AR, when I should have received about 10x that amount. I have payroll of $300k every two weeks. I have huge amounts of raw material coming into manufacture the products I have sold to North Africa which have payment due well in advance of receipt of the LoC funds, due to the manufacturing time, which will tie up a good deal of my cash. New business is trickling in every day due to the status of the world, and I have literally no clue if my A/R collection is going to actually come in, even though these are all extremely solid accounts whom I've never had an issue with before. I need to keep my employees as we are extremely busy until just last week and I need to make the goods for the pending orders, and I need to keep my raw material vendors happy as they still owe me a few deliveries for the aforementioned works in progress. However, I cannot keep paying 600k a month for my employees in this diminished environment.
There are a lot of pitfalls and huge opportunities in this present market as we have a niche position as a domestic manufacturer when all of our competition is overseas. I have had numerous calls from customers wanting to expand their business due to distrust of the Chinese supply chain.
I literally have no idea what the future holds for the next 2-3 months with regards to the economy..... My directive to my staff has been to hold off on all stock replenishment jobs and raw material purchases and address the two orders in process, and sell from stock on everything else.
Thanks for humoring my long post and I'll owe you a beer.
I own a small business, we have over 100 employees and are involved in manufacturing. Our business has been absolutely booming we received large international orders secured by letters of credit drawn on extremely well rated European banks. As of two weeks ago we had 3 million dollars cash in the bank. Accounts receivable of 3.6 million, accounts payable of 4.5 million and a sales backlog of around $12,000,000.
The gigantic backlog is made up of around 4,000,000 of routine business about 30% of which is prepaid and the balance of which is net 30 or net 60. The remainder is a $6,000,000 (43% gross profit) chunk for a state owned corporation in North Africa which is secured by an irrevocable letters of credit drawn on two Major western European Banks. It was placed in December of last year with delivery in June of this year, LoC payments terms are cash against documents. The other order is a 2,000,000 order from South America of which I've received 50% down payment with balance due at time of order, this is due in about a month. Both orders do not seem to be currently in danger of cancellation or missed delivery due to the crisis.
My issue is this: I received about 50k in payments this week on my AR, when I should have received about 10x that amount. I have payroll of $300k every two weeks. I have huge amounts of raw material coming into manufacture the products I have sold to North Africa which have payment due well in advance of receipt of the LoC funds, due to the manufacturing time, which will tie up a good deal of my cash. New business is trickling in every day due to the status of the world, and I have literally no clue if my A/R collection is going to actually come in, even though these are all extremely solid accounts whom I've never had an issue with before. I need to keep my employees as we are extremely busy until just last week and I need to make the goods for the pending orders, and I need to keep my raw material vendors happy as they still owe me a few deliveries for the aforementioned works in progress. However, I cannot keep paying 600k a month for my employees in this diminished environment.
There are a lot of pitfalls and huge opportunities in this present market as we have a niche position as a domestic manufacturer when all of our competition is overseas. I have had numerous calls from customers wanting to expand their business due to distrust of the Chinese supply chain.
I literally have no idea what the future holds for the next 2-3 months with regards to the economy..... My directive to my staff has been to hold off on all stock replenishment jobs and raw material purchases and address the two orders in process, and sell from stock on everything else.
Thanks for humoring my long post and I'll owe you a beer.