As small and medium-sized enterprises in the market fight liquidity during this pandemic, there are levers that a business owner or CFO can use to temporarily generate more liquidity. While there are implications with each lever that is pulled, the truth is that a company may have no choice. Business survival is at stake.
Still, the smart news here is that if you build your dating capital, partners, suppliers and consumers will probably be more perceptive and more willing to paint with you in COVID-19 times than in general circumstances. The key is to be fair and transparent in explaining your scenario and requesting concessions. It’s not a simple conversation, but common and early communication is essential, without avoiding phone calls. You’ll want to make them perceive that keeping your business running is also beneficial for everyone.
To temporarily generate cash, here are some tactics for losing money:
You also want to prevent cash leakage. The preservation of cash, of course, is to prioritize who is paid and when. Although each company has other circumstances, those decisions are based on identifying a mandatory fee that, if not paid, can also bankrupt it because of other bills that would possibly be delayed.
You’ve probably already reduced deferred capital spending and spending anywhere you can. You may also have negotiated loan and rental abstentions with your lender and landlord. Here are some additional tactics to save cash, and a maneuver at all costs.
As COVID-19’s economic deaths accumulate throughout the day, time is critical to convince your partners, suppliers and consumers that running with you to take your business to the other aspect is also a victory for them.
I am the founder and CEO of McCombie Group, a strategic consulting and M&A consulting firm on restructuring, recovery and transition of mid-market companies. I’ve been
I am the founder and CEO of McCombie Group, a strategic consulting and M&A consulting company aimed at mid-market restructuring, recovery and transition companies. I have been a guest speaker at investment meetings and have appeared in the Wall Street Journal and Bloomberg on personal equity and family office circle. In addition, I was an adjunct professor and writer of the “Full Direct Investment Manual: a Guide to Family Offices, Qualified Buyers and Accredited Investors” published through Wiley.
Before that, I was a control representative at McKinsey and Company and an investment banker at Citigroup. I graduated from Harvard Law School with a major in commerce and corporate bankruptcy, and also took in-depth courses on corporate finance at Harvard Business School. I earned my bachelor’s degree in economics and finance from the University of Miami – Go Canes!