Managing your cash pressures

In the context that your business is experiencing cash flow challenges, we can assist you to stabilise your operations. Through our support we aim to bring back trust with your stakeholders. 

Our approach

We consider the following three key stages as we seek to stabilise our client's cash position:

Stage 1: Rapidly understanding the financial position

Depending on the severity of the situation, an assessment of available and trapped cash may need to be made in a matter of weeks or even days. Responding quickly is essential.

We can assess potential short and medium term cash issues focusing on liquidity and covenants. This can range from preparation of immediate 13 week short term cash flow forecast, to identifying potential worst-case scenarios, etc.

We can review your finance documentation and identify if there is flexibility on covenants, cures, additional borrowing capacity and scope to access government funding initiatives.

We can develop operational contingency plans to minimise disruption to your business, inclusive of reviews of authorised personnel to manage bank and system processes and controls.

We can help you reassess payment priorities by considering time to pay arrangements. We will identify if there is contractual flexibility to amend payment and pricing terms and engage with suppliers/customers.

Stage 2: Helping you take action to protect the position

Once clarity on the cash position has been obtained, the directors and management teams should take immediate action to ensure they can (at a minimum) maintain this position, alongside identifying opportunities to access new money, if required. 

The methods we will propose will be tailored to the situation and can take the following shape:

  • Implement cash conservation measures
  • Rapid optimisation of working capital to preserve liquidity
  • Seek additional funding support
  • Identifying opportunities to generate cash via equity release. 
  • Short term financial covenant waivers or relaxation
  • Implementing rapid cost reduction plans 
  • Setting up of a specialised cluster to deal with operational and financial issues
  • Bringing in a Chief Restructuring Officer (CRO) to have responsibility for taking control of the cash position.
  • Considering whether liabilities and or cash can be accessed via a managed exit or accelerated disposal process of underperforming parts of the business

Stage 3: Manage internal and external stakeholders

Alongside stages 1 and 2, organisations will need to quickly understand who their key stakeholders are (internally and externally). Management of stakeholders can often be challenging in a stressed scenario, particularly where interests are conflicting and there are significant demands for real time information.

We can help you develop a clear communication plan to ensure consistent messaging across all channels and by taking into account all stakeholders (internal and external). 

Keeping directors duties front of mind

In the event of financial and liquidity stress, directors must move their attention away from shareholders towards protecting the interests of creditors to avoid wrongful or (in extreme circumstances) fraudulent trading.

We can support the organisation by providing to directors:

  • A clear view of cash flow, alongside balance sheet position and trading performance (stages 1 - 3); 

  • Evidence of decision making process by documenting all material decisions; and

  • An indication if they need to consider ceasing of trading to minimise loss to creditors, and mitigate personal liability. 

Solvency issue

The above course of action shall assist to resolve a liquidity issue but it is not the end game. In some instances a  recapitalisation is essential to bring your organisation back to a solvency status.

How can we help?

Our accounting and restructuring teams can assist you in addressing your organisation challenges. Please talk to us.

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Rajeev  Basgeet

Rajeev Basgeet

Partner, Business Recovery Services, Forensics and Financial Crime, PwC Mauritius

Tel: +230 404 5148

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