Financial Recovery Actions
TOP 5 FINANCIAL RECOVERY ACTIONS
1 – CONSERVE YOUR CASH
2 – GAIN ACCESS TO CAPITAL
3 – BE OPPORTUNISTIC
4 – RENEGOTIATE EVERYTHING
5 – BECOME A DATA-DRIVEN COMPANY
As businesses across the nation begin to re-open their doors, it is important to understand key steps on this journey to recovery.
Though these times are still uncertain, we are certain that our Top 5 Recovery Action steps can help your business navigate these challenges and preserve enterprise value as the economy re-opens.
CONSERVE YOUR CASH
- Build a cash flow forecast. This is a great tool to help you be strategic with your collections and disbursements, as well as to run “what-if” scenarios.
- Revenue restructure: Map your order-to-cash process and find places to accelerate cash in this cycle. Consider changes to pricing, payment terms, contract terms, credit and collection policies.
- Expense strategy: Figure out which fixed costs can be converted into variable costs or removed completely to reduce monthly burn.
- Consider sale-leaseback and/or refinancing of assets.
Identify slow-moving inventory items and how to convert them into cash.
GAIN ACCESS TO CAPITAL IN THE NEXT 6-9 MONTHS
- Utilize existing lines of credit.
- Seek out alternative financing sources as banks will be overwhelmed for the foreseeable future as they process relief loans.
- Have rock-solid financial data in order to substantiate changes in performance – good or bad. With so little visibility into the future, it will be tougher than ever to justify pro-forma forecasts.
BE OPPORTUNISTIC WITH RESOURCES
- Look for opportunities to capitalize on available resources.
- Capitalize where supply has increased and/or cost declined.
- Recruit talent: As large organizations shed people, use it as an opportunity to attract and hire upgrades to your team.
- How can you leverage changes in business/economy and use them to your advantage?
- See what departments can be outsourced for competitive advantage or cost reduction.
- Determine if under-performing business lines, products or personnel can be outsourced or eliminated.
- Physical space: Talk with your landlord/lender.
- Vendor agreements: Explore creative payment structures.
- Debt Refinancing: Work with your bank and be transparent early on.
BECOME A DATA-DRIVEN COMPANY
- Focus on becoming profitable, fast.
- Make margins your first priority.
- Measure leading indicators. What can you offer in greater value than competitors?
- Understand your point-price elasticity of demand. Identify the value drivers in your product to determine pricing and optimize your price/volume mix.
- Be adaptable: Understand your business and revenue model in today’s world. Know your customer base, geographic environment, what impacts it, and how to take action if changes occur.
Top 5 Financial Recovery Actions
Additional Resources for Business Owners
Plan and prepare and project as we might, in business as in life, not everything is within our control.
But there are elements within your control. You just need all the pieces of the puzzle to see what they are.
So, how can you take financial control during these uncertain times?
To answer this question, CFO Alliance will be hosting a live webinar on March 31st to discuss 13- Week Cash Flow Forecasts.
CFO Alliance and Victory Partners partnered up for an interactive panel discussion exploring strategies for accelerating your business while keeping one foot on the brake.
Join us as two industry veterans from public accounting, private equity, and investment banking discuss a variety of topics focused on navigating your business through uncertain times and preserving enterprise value as the economy re-opens.