Crises come in many forms and require you to take a range of preparation steps depending on the event. But every crisis impacts your organization’s finances and, for this reason, financial preparedness is a critical part of emergency preparedness. Measures you take in advance and during an incident will help your organization weather the crisis and thrive afterward.

Effectively managing finances in a crisis starts well before anything happens. Consider the following preplanning activities:

• Insurance: Review your insurance coverage. Have a discussion with your broker to make sure you have the appropriate coverage for your organization. Property, general liability, and professional liability are some common insurance policies businesses and other organizations carry.Business disruption insurance is a key policy that is often overlooked. It covers the loss of income that a business suffers during a disaster, the costs associated with temporary displacement, and can help with continuing expenses. When contracting for this type of insurance you will evaluate your risks and determine how much, if any, disruption coverage is needed. So even if you don’t end up purchasing the insurance you can get insight into the risks your organization faces. Utility disruption insurance is also available.Before an incident it is also important to understand the claims process for the policies you carry and prepare accordingly. Discuss with your insurance broker the documents and the evidence you will need to provide.

• Financial Safety Net: Establish or review your financial safety net. Understand your cash flow (incoming and outgoing) at least two quarters out. If possible, maintain a minimum two month operating supply of cash. This supply may need to be more, or less, depending on your organization.Consider establishing a line of credit for emergency use. This can be a new line of credit, a credit card exclusively for use in an emergency, or a portion of an existing line of credit.

Having established suitable insurance and your financial safety net, when an incident occurs:

• Prioritize: Cash is king, especially in a crisis, so keep open lines of communication with those you owe money and those who owe money to you. You may need to prioritize receivables before payables. Consider offering incentives or discounts to customers who pay early. This helps increase incoming cash flow at the time of incident when you need it most.

As for payables, it is sometimes less impactful to pay a late fee in order to have access to funds during a crisis. Alternatively, negotiate with parties you owe money to. See if payment dates can be extended due to the emergency.

• Record: Maintain good record keeping practices during the incident for insurance and tax purposes. Keep track of outlays and document loss of business as artifacts.

• Communicate: Not directly tied to finances, but key to financial survival, is communicating with key stakeholders, especially customers. Keeping customers engaged will help ensure that your business thrives after the emergency passes. Customers who can empathize with you are more likely to stay loyal during and after the crisis.

Managing finances in a crisis is not just dollars and cents during an incident. It ties directly to having the right insurance coverage, knowing your cash flow and stakeholders, and your communications plan. Support emergency preparedness by taking steps to ensure your organization is financially prepared for the unexpected.