Covid-19 : Cash is (still) king

Face to the epidemic, which has become a pandemic, of Covid-19, the perspectives of economic growth seem more and more uncertain.

On April 8, 2020, the Banque de France reported that GDP fell by 6% in the first quarter, while general lockdown was introduced on the 17th of March.

Against this backdrop, the public authorities have implemented a support plan and numerous safeguard measures (see the news on our dedicated blog).

Cash is king, the crisis reminds it to many business sectors, accustomed to historically low interest rates.

To protect their cash and liquidity, the companies should carry out 1) an inventory of the situation and risks that will enable them to build 2) cash flow forecasts and 3) activate the right levers in terms of cash receipts and payments.

Here are a few questions to initiate your reflection, do not hesitate to contact us to discuss your specific issues.

• What is the situation inventory today?
  • What are your risks?
    • What is your level of exposure? How are the other players in your sector or industry reacting?
    • What are your own specific constraints?

 

• Where will I be tomorrow?
  • Do you have a cash flow forecast? If not, there is an urgent need for one!
    • Cash flow forecasts allow you to better monitor and manage cash over time: it is an essential aid to decision-making.
    • By establishing the forecasts, it will be possible to carry out different scenarios to better visualize the real impact of the health crisis on the activity as well as the generating of cash.

 

• Do I control my charges?
  • Have you shifted everything that should (could) have been shifted in terms of charges taking into account the new provisions?
  • Are you sure that the loan payments have been postponed and that no withdrawals have been made from the bank?  Even if this is the case, it is possible to request repayments.
  • Do you follow up on cash receipts on a daily basis?
    • Do you have an automated or semi-automated process for tracking your cash receipts on a daily basis?
    • What is the trend and impact of the crisis on your creditors? How do you continue to collect overdue receivables?
  • How do you proceed with suppliers’ payments?
    • Define an envelope by budgetary nature according to the activity: general and administrative expenses / goods / to be paid
    • Negotiate with your property owners if necessary
    • Review payment deadlines according to the different cash flow budgets: weekly / bi-monthly payments
    • Define a list of so-called "strategic" suppliers

Do not hesitate to contact us to discuss about your cash flow issues.

 

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