The COVID-19 outbreak has created a new way of life for many. From companies who had to embrace work-from home policies to the economic instability this created, we’ve learned a lot over the course of the past two months.
The Coming Recovery: How Are You Preparing for the Next Few Months?
But now, when even slow-to-react states like Illinois are starting to pivot from panic to recovery, it’s time to start taking an optimistic-yet-wary look at the next few months. Leaders need to ask how they’re going to get back up to full capacity. That said, they also need to understand what it’ll be like operating in a new operating environment that will include everything from social distancing to new cleaning methods.
One of the most important things to consider, however, is the financial impact of reopening. How will cash flow change? Will the shutdowns take us into a recession or will the strength of the economy pre-outbreak give us the opportunity to rebound? Today, we’d like to explore just one of the many things companies need to do in anticipation of reopening—look at the financials.
More in Our Tips on Surviving the COVID Crisis Series
- First Steps You Should Take When Thrown into a Crisis Situation
- Tips on Keeping Business Coming in When Cash is Short
- Shoring up Your Payroll in the Middle of a Crisis (Bonus: How to Approach HR Initiatives)
- Speeding up Receivables—Get the Money Coming in
Reopening with Momentum: Financial Check
In a recent checklist released by NetSuite, the company explored a variety of the steps you need to take during the ramp-up phase to ensure your business is ready for the new normal. Though the entire guide explores your path to completing everything from a business model assessment to incorporating new models of pricing and payments, we would like to discuss the basic steps to get your financial house in order.
Calculate Your Runway
Even if we are able to recover, the path might be slow and arduous. This means that the first step you need to ask is, “how long do we have?”
Calculating runway should blend optimism with wariness, and you should consider a variety of scenarios for the next year. Ask yourself whether the revenue shortfall will continue, and run this scenario against revenue models that may occur if revenue declines or increases.
Explore Funding Options
If your analysis shows you may not have the money to get back to recovery, now is the time to start looking at loans and non-bank funding options. Exhaust any and all options you have, and when needed, draw on lines of credit to extend your runway.
Additionally, explore vendor financing and receivables financing, which has matured incredibly over the past few years. Revisit conversations with existing investors about additional investment at attractive terms. Remember: Timing is critical.
Know How to Bridge the Gap
The next step is clearing your path. When will the revenue come into play? The checklist recommends you continue exploring ways to defer payments on leases and toward suppliers, prioritizing suppliers and vendors that are critical to driving top line growth.
Additionally, you should take the opposite approach regarding receivables, continuing to take action around expediting receivables, with an eye toward changing net payment terms, creating incentives for early payment, providing varied payment options and asking for deposits on custom orders.
Your Time to Shine: The Controller’s Council is Here to Help
In times of crisis, it’s all about getting to next month. As the person in charge of the short-term operations and finance, this means it’s time to lead. Get to know more about how to make this happen by following the Controller’s Council for all the latest.