How to ensure liquidity during times of COVID-19

Manage and ensure the liquidity of your organisation during Covid19

Imagine, just 10 days ago we were all confident that 2020 would be a very good year. Today, we have to face times of uncertainties. Not only from a medical point of view but also from an economic point of view. Many marketing budgets have already been paused or even cancelled.  Especially the Travel & Transportation, Hospitality and now OmniChannel Retail sectors are having hard times. The reason?  Who needs local marketing to increase sales in stores?  All retailers except supermarkets, drugstores, pet stores and DIY stores have been closed since Wednesday.

We work with many young companies that did not experience the first crisis in 2008. Most of the team-members were not even employed at that time. However, it is not easy to cope with these changes as managing directors and the mere fact that the whole team is working on-remote. Therefore we want to take the initiative and let you know: YOU ARE NOT ALONE. 

We are all in the same boat! Especially for entrepreneurs it is even more important to stick together and evaluate together how we see further opportunities despite this crisis. True to the saying: When the wind of change blows, some are building walls and others are building windmills (from China). Following this saying, we want to invite you to  a dialogue and also give you practical tools on how to overcome this crisis. 

For us, the following 6 steps are important to manage your own liquidity and foresight both confidently and dynamically:

Establish an overview of your own situation

  1. Gain an overview of the client portfolio: Evaluate with your key account managers which industry is already affected and which industry will be affected in the next 4 weeks. Create a clear overview of which sales have already broken away and which sales will break away in the coming weeks.
  2. Financial Planning & Scenario Modeling: Based on the customer portfolio, financial controllers should primarily model scenarios. Those should  take into account: sales, loss of sales, wage costs, other costs and cash on hand.
  3. Seek discussion with employees: Now it is important to communicate this scenario planning transparently with employees, even if they are all currently working on-remote. Here it is important not to build up stress. Try to avoid to mention that employees can lose jobs. Rather communicate to engage even tighter and to come out of the crisis together. This will be achieved by means of jointly agreed short-time working.
    Especially leadership is more than important in these times to keep the confidence in your company.

Proactively seek dialogues with your customers and ensure liquidity

  1. Proactively seek dialogue with customers: Your customers are also under enormous stress. Don’t wait until you get a call. Be proactive and seek dialogue about how you could support your customers. If you are a Subject Matter Expert in an area such as Travel and Transportation, it would make sense to create a white paper on COVID-19 and the travel industry. Furthermore,  invite them to join in the dialogue.
  2. Ensure liquidity: Don’t wait until your own cash reserves are depleted. When applying for short-time work, you don’t have to go into the red (as it was previously the case) to apply for short-time work. Anyone who has lost more than 20% of their turnover can apply for short-time work immediately. Also talk to your bank and make sure that your liquidity is sufficient.
  3. Seek the exchange with like-minded people: The first wave of stress is over and many appointments have already been taken off the agenda. Use this opportunity and seek exchange with other entrepreneurs. We will start a COVID-19 LinkedIn group and hope that you will be part of it.

We will all come out of this crisis stronger! Keep your chin up!

If you want to get to know more about us or about  what we do and what we offer, please don’t hesitate to contact us at any time.

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