Crises happen. Sometimes they’re internal, or as you’ve seen in the last month, sometimes they’re external.

As a controller, now is probably one of the most stressful times you’re facing. It’s also one of those ‘call to greatness’ moments for your role. After all, you’re the one managing the cash. It might take a bit of work, but if you have the skills to create a bit of breathing space during a crisis, you’ll look great to the rest of your firm and come out of the pandemic stronger than competition.

However, you still have to put in the work. From assessment to stabilization to response, you’re the one who will lead your people toward the promised land—a strong recovery. Here are just a few tips to take the lead during a crisis.

Evaluate the Situation

Offering tips on preparing for a crisis isn’t going to help you here (though you may want to subscribe to our blog for our upcoming crisis preparation tips article after this passes). That said, crises are always looming—though few have probably hit the entirety of the business world as hard as this one.

A card network outage, a global shortage, a geopolitical uprising somewhere in your company’s supply chain, a cyberattack—all things that might affect your business specifically. Though the scope is nowhere near as big, the depth of an individual crisis might hit you almost as hard as a global pandemic.

Knowing tins, when crisis strikes, step 1 is to gather your bearings. Ask the following.

  1. What damage has been done? (How has this affected cashflow/working capital?)
  2. What action needs to be taken now, if any? (Is fundraising required to shore up liquidity?)
  3. What further damage may be done if the issue continues? (What are the effects on cash flow of continued disruption to this revenue stream?)
  4. How can we alleviate that damage as much as possible? (What changes can be made to absorb the impact?)

Ultimately, the response to the crisis, over and above quantifying the potential impact, will be the headline measure of treasury’s effectiveness. The response to a cash crisis will typically rest on access to internal and external liquidity.

Buy Yourself Time

In a crisis like COVID-19, your business may have limited time under existing financial arrangements. According to KPMG, here are seven steps can help you gain time to stabilize:

  1. Improve visibility of funding requirements through robust short-term cash flow forecasts
  2. Identify and implement `quick wins’ to generate trapped cash or preserve cash
  3. Establish tighter controls over cash and bring in cash-related KPIs  – to seek to reduce leakage and adapt to changing lender requirements
  4. Develop short-term tactical liquidity strategies
  5. Manage communications and interactions with relevant stakeholders (lenders, suppliers, landlords and tax authorities) e.g. build facility headroom or incremental financing
  6. Rebuild trust with stakeholders to support sustainable restructuring
  7. Rapidly explore alternative financing options with investors/financiers

Read our blog on the Cares Act Stimulus bill and how it affects your business here.

Stabilize the Cash Flow

Though often easier during a localized emergency than a global one, the most important thing you need to do during any crisis is to stabilize the cash flow. Chase recommends the following steps to stabilize cash flow.

  • Get in Contact with Lenders: Explain your problem as soon as you realize you’ll be unable to make a loan payment on time. Doing so promptly may give your creditors more room to be flexible than if you let them know at the last minute.
  • Find Ways to Collect Anything You Can: Since this is a global crisis, everyone’s a bit short here. However, you can collect without damaging relationships. A few tips: Call customers with outstanding invoices and offer a discount for paying before the due date. Focus on longstanding customers with whom you have good relationships. If any of your customers are struggling to pay overdue balances, allow them to pay in installments, but collect the first one immediately. 
  • Try to Get Rid of Slow Inventory:  Even if you don’t get the best price, if something is not selling well it’s better to get some return on it than none at all.
  • Try to Barter: If things are slow and your own service providers are knocking, see if there are any agreements. If you have a good relationship with a service provider, ask whether it would let you “pay” with your product or service.

A few things to note. Never sound desperate, don’t overdo the panic selling, and remember that we’re all in the midst of this.

Be Ready to Pivot

Though it may seem like we’re in the middle of the woods and it may feel like there’s no way out, rest assured, we’ve survived worse. Soon, the curve will “flatten” and the bounce will come, and when that happens, it pays to have a plan for success too.

That said, let the phrase ‘never again’ echo in your mind. Crises will happen again, and it pays to have the right people, processes, and technologies in place to adapt. Stay tuned for our crisis preparation guide.

WEBINAR - Controller Confidential: 4 Ways Automation Powers Accounts Payable Efficiency Wednesday, August 11

In our newest webinar, Chris Perry channels his extensive experience and financial expertise to tell you why business leaders still lose sleep over hybrid workforce shifts, process inefficiencies and unanticipated cash flow challenges. If you’re looking to streamline your AP to save time and money and prime your business for real growth, join AvidXchange subject matter experts Chris Perry and Rhonda Greene, to explore how to improve your AP efficiency and reap the rewards.