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/

Original publication date: April 9, 2020

Date last updated: April 10, 2020