When faced with any crisis that impacts their operations, businesses should urgently undertake an assessment on their liquidity position through cashflow forecasting and, based on the outcome of this assessment, manage affected stakeholders proactively.
The liquidity assessment through cashflow forecasting may reveal that the business will struggle to meet its obligations to creditors or breach covenants. In such a situation, businesses have various options for dealing with the creditors. They could renegotiate debts repayments with lenders by seeking a moratorium on debt service or restructure the debt, negotiate extended payments terms with suppliers, reduce their workforce, dispose idle or underutilized assets and/or cut operational costs.
Partner | Advisory, Business Restructuring and Forensics Services, PwC Kenya
Tel: +254 (20) 285 5000