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
Company:
Bain & Company
Categories:
Cash flow and financial management, Revenue protection and opportunities
Source:
- Five Steps Companies Can Take to Protect Cash amid Covid-19, Apr 2020 (Bain & Company)
Original publication date: April 9, 2020
Date last updated: April 10, 2020