Taking control of your cash flow

The COVID-19 pandemic has dealt a blow to a majority of businesses. But it need not be fatal, if you take the right steps now. Doing a thorough analysis of where your business is positioned today is the first step. The next steps should include cash-flow forecasting and scenario planning. When coupled with proactive cash-flow conservation and management practices, you can help ensure your company survives this unprecedented setback.

1. It’s unprecedented: Even the largest companies were caught off guard and did not plan for this level of disruption in their risk mitigation strategies.
2. Don’t dwell in denial: The faster you accept the magnitude and possible length of the current situation, the quicker you can plan and act strategically to stave off a liquidity crisis.
3. Take immediate- and mid-term planning into account: Most analysts are predicting a 12 to 18 month pandemic timeframe, so plan for a minimum of 12 months out.
4. Think about technology’s exponential effect: Overnight, companies have had to provide a centralized and secure virtual office for their work-from-home employees. The remarkably positive results will likely redefine the notion of the “office” forever.
5. Progress your digitalization: Use digital processes to eliminate repetitive, inefficient, manual calculations, such as forecasting. Time is money, and your employees’ time is far better spent interpreting data, rather than creating it manually.
6. Get ahead of cash crunches: Assume that at some point in the mid-term, you’ll be faced with a cash crunch, and will need to tap into your line of credit or additional types of funding. Make proactive arrangements with your bank now, just in case the worst-case happens.

1. Mitigation strategies.
   a) Renegotiate mutually beneficial and acceptable terms with your landlord, vendors, customers; get advice from your accountant and lawyer.
   b) Limit discretionary spending to conserve cash.
2. Use modelling tools for day-to-day management.
   a) Determine your current-state cash position and use this as your baseline.
   b) Use a technology platform to run scenarios that will allow you to prioritize where your business focus should be placed.

• Understand and evaluate government relief programs.
• Evaluate accounts receivables and payables to uncover unbilled work or discounts.
• Identify workforce changes and implications of compensation packages.
• Employ scenario planning and perform stress-testing to address risks.
• Use digital platforms or programs to assist in developing liquidity forecast.

1. Ensure you have a framework for managing supply-chain risk.
2. Ensure your own financing remains viable. 
3. Focus on cash-to-cash conversion cycle
4. Revisit variable costs.
5. Focus on inventory management.
6. Extend payables intelligently.
7. Manage and expedite receivables.
8. Audit payables and receivables transactions.
9. Consider alternate or non-traditional revenue streams.

• EDC Business Credit Availability Program (BCAP) Guarantee
• BDC Co-lending program
• BDC Working capital loan
• BDC Mezzanine financing

1. Well-formulated business plan.
2. Evidence of your own commitment in the form of personal investment and collateral.
3. Examples of financial strength, including credit history, financial acumen, and your prior financial success.
4. Demonstration of a capable professional profile, exhibiting business savvy, skills, determination and competency to successfully lead your company through recovery.

• Productivity
  • Revenue/labour hours
  • Billable time
  • On-time delivery
• Financial health
  • Margins
  • Cash flow
  • Debt management

• Credit insurance
  • Protects against non-payment.
  • Offers customers more competitive payment terms.
  • Provides increased access to cash from financial institutions.
• Foreign exchange facility guarantee
  • Frees-up collateral tied to foreign exchange contracts.
  • Helps manage currency volatility risks by securing exchange rate.
  • Increases access to cash from financial institution.