The unprecedented nature of the current COVID-19 pandemic has had a significant impact on economic activity around the world. As it becomes more apparent that things aren’t going back to normal anytime soon, businesses are forced to reflect on their current finances and contingency plans. Surviving the pandemic is the primary goal, and it’s proving more difficult than initially anticipated.
Identifying risks and planning for recovery
During these trying times, businesses must become proactive in implementing financial contingency strategies. The limited social activity means business is slower, and revenues will suffer. With little cash flow, companies are vulnerable in many areas of operation. For example, retail businesses are forced to close up shop to prevent further losses. Restaurants and food-related companies also have no other choice but to limit operations and let employees go. Therefore, every business that wants to survive and persist in this environment needs to become more decisive and act with purpose.
Of course, it helps if you begin by analysing the current finances. And if you need accountants Central London firms offer consultancy services that can meet the short-term requirements of businesses that are already struggling. A complete financial assessment will be the starting point so that you can formulate contingency plans and put them into action. Here’s a detailed guide on the specific steps to employ so that your business doesn’t suffer financial hardship due to the pandemic.
How to stop “bleeding” or financial loss
This step requires immediate identification of cash flow and liquidity forecasting. It’s vital to manage specific areas or commitments where most of the company’s finances go. Some examples include overhead expenses, stock, suppliers, and inventory. You’ll need to prioritise when it comes to controlling cash flow by coming up with a short-term solution. When applicable, this is also the time to look into the possibility of getting help from the government.
Analysing the business
This step is more systematic because it involves looking into the numbers to make decisions. Since you are focusing on actual data, it’s more effective in determining underlying issues and concerns that financially impact the company. After a thorough analysis, the data should be condensed into reports and actionable plans. Stakeholders should also be looped in and regularly informed about updates and changes.
Developing a restructuring plan
After analysing and forecasting the business’s financial status, the next step is to come up with a detailed restructuring plan. It should include new and practical arrangements to secure capital. Also, all stakeholders need to agree and support the new plan. No matter how difficult, the plan should also include steps for potential business closure should the need arise.
After all is set, implementing the plan should be equally systematic. There should be guidelines on how to monitor and track progress. Each stage should be marked with a KPI to ensure that achievements are also measurable. If necessary, changes may be made along the way so that the plan can be refined further to fit the company’s financial contingency goals.