Bain & Company published article providing ways for companies to preserve their liquidity and cash position during Coronavirus crisis

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Five Steps Companies Can Take to Protect Cash Amid Covid-19

Preserving Liquidity and Cash Position – Bain & Company published article providing ways for companies to preserve their liquidity and cash position during Coronavirus crisis

Summary:

Bain & Company wrote article that gives advice to companies how to preserve their cash position during COVID-19 pandemic. Summary recommendations include:
  • Assess Liquidity and Cash Position – Analyze impact to finances, estimating burn rate and cash position, additional sources of capital, stability of customer base, level of receivables and budget, and inventory or delivery from suppliers
  • Form Central Cash War Room – Organize cash war room led by Chief Financial Officer (CFO), and staffed by members from treasury, sales, purchasing and human resources, for making rapid, real-time decisions on urgent liquidity and cash preservation actions
  • Forecast Cash Flows – Create 13-week cash-flow forecast diagnosing severity of cash position, updated weekly and compare with real-time data
  • Control and Preserve Cash – Reduce spending, challenge non-essential requests, and identify what can be delayed and where to invest for continuity
  • Shorten Cash Conversion Cycle – Manage cash conversion cycle, by optimizing and controlling accounts receivable, accounts payable and inventory
  • Do Scenario Modeling – Prepare enterprise models for best-case, base-case and worst-case scenarios to assess company’s level of exposure, stress test profit and loss, and create contingency plans
  • Plan for Post-Crisis Future – Prepare revised business plan for after crisis, considering improvements made during epidemic, ongoing opportunities and results from strategic investments
To read more on article for free, please visit https://www.bain.com/insights/five-steps-companies-can-take-protect-cash-covid19/
Company: Bain & Company
Categories: Cash flow and financial management, Revenue protection and opportunities

Original publication date: April 9, 2020

Date last updated: April 10, 2020