Business advice from
turnaround specialists on Covid -19
Globally, businesses are down, demands have slumped, collections are pending, labour issues are prevalent, social distancing and sanitation is a new normal. We are learning to live with Corona slowly.
For businesses severely hit by the economic effects of COVID-19 globally, the steps they take today may result as the difference between survival and liquidation.
Below is the action plan as suggested by turnaround specialists using remote working techniques as appropriate.*
1. Prepare a conservative yet detailed weekly cash plan for the coming quarters. If possible, break it into daily plan for the next few weeks.
Be realistic so that you can use this to help ensure that your company does not run out of cash. Going forward, compare budget to actual each week.
2. Decrease cost and increase collections if not revenue - If the plan shows that you will run out of cash, then create an action plan to reduce costs and/or increase revenues and collections.
Important: Have a meeting with your most capable managers, review with them the cash plan and every line item on your financial statements and solicit their input and ideas about how to increase cash, increase revenues and decrease costs.
Prepare a written action plan based on the results and specify who is responsible for completing which actions by what date. Nailing down plans and responsibilities is critical.
3. Induce purchasing controls in the system, so that only expenditures specified in the cash plan are made. Define who has authority to approve the nature of expenditure and its outer limit, in what circumstances.
4. Eliminate non-vital expenses. Needless to explain, these are expenses which can be delayed.
5. Slow inventory? Try to get rid of idle lying inventory through discounted sales or bulk sales to stressed inventory buyers.
6. Stop producing money-losing products and providing money-losing services. If you are unsure which are money-losing products or services in your business, engage a professional who can quickly analyze the numbers.
7. Implement collection plans. If your business is not totally cash or credit-card-based, consider offering a discount for early payment. Offer to receive your outstanding in part payments.
8. Avoid selling to customers that do not pay. Do you have customers who are unable to pay the amounts they owe you? Are you unsure about their credit status?
Prepare a list of customers who have either defaulted or delayed payments in the past. Try not to sell your products or services to them on credit.
Insist them to pay cash in advance and design a fail-proof internal system to ensure that your company receives payment before providing its products or services. This benefits your customers, too, by ensuring that they can obtain needed materials and services.
9. Think of opportunities for additional revenue do you have in the current environment? Make use of the situation to offer a new product or service relevant for the society and businesses.
10. Take professional help available for your business and confer with your professional advisors (tax, law’s) to ensure you comply with current requirements.
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