4. Cash is king

The majority of companies face financial issues during a downturn. In order to manage the crisis successfully, you need to minimise your debt and receivables and maximise your liquidity.

Cash management must be your priority, because otherwise you won’t be able to fulfil your obligations which would lead to insolvency.

1. protect your liquidity and insist that your customers pay in a timely manner
2. re-examine your cash-flow, financing sources and expenses
3. monitor your performance against financial and non-financial covenants
4. keep your inventory stocking levels as low as possible
5. utilise factoring opportunities.

Effective working capital management can help reduce your dependency on your creditors and lower your financial costs as well as risks of losses related to outdating of inventory or unenforceable claims. Consider the following strategies:

1. stricter credit control and motivating customers to pay on time
2. rewarding sales representatives only upon collecting payment, not upon closing the transaction
3. paying invoices only on the due date, unless there is a specific incentive to pay early.

Re-examine your contracts with banks and other creditors – are they beneficial to you considering the current market conditions? Closely monitor your economic performance and your financial liabilities and regularly and openly communicate with your stakeholders – unexpected surprises are the worst.

How can we assist you?

We can help you improve your working capital management, re-examine your supply chains, set your priorities and support cash generation of your business.