Going through the rescue phase is absolutely exhausting. After the dramatic swings over the last four months, it becomes all too easy to become dulled to change. I think the more important reflection is that this moment in many ways represents a chance to take a breath and recalibrate, for ourselves and our companies. With PPP loans and stimulus being largely utilized and economic data looking a bit better than was anticipated even a month ago, every company and leader has a chance to ask the same questions we were four months ago, just this time with better information and clarity. The truth is, while the rescue phase for many might seem to be over, the hard truth is it may actually have just begun. Making sure you have done everything possible to make decisions from a place of strength will help no matter what happens next (and let’s admit for a moment that none of us really knows).
What does it mean to make decisions from a place of strength? Unlocking access to financial resources to buy time, and having a strong plan that proactively addresses the hard “what-if” questions will in combination make for a well-coordinated rescue plan. In truth there’s no point in asking the hard “what-if” questions without first making sure you have the financial resources to make great decisions.
Over the last three months, a broad cross-section of companies across industries have all pursued a number of actions to the same end: adding to their cash positions. Drawing on lines of credit, executing sale lease-backs of properties, and issuing and / or refinancing debt at historically low interest rates are all tools that are widely being used. All of these actions buy time during a period of uncertainty, and the truth is you likely have access to some of these same actions as well.
While your financials may continue to be strong or at least better than initially anticipated, it is so important to take action now, recognizing that we don’t know what comes next. Unlocking the financial resources at your disposal now will help you meet the uncertain future we’re all facing right now.
We have also found opportunities to add cash to organizations by helping find opportunities to accelerate the receipt of payment from receivables, and the management of contracts to make the most of contracted terms. In both cases, taking a look at the top 20 contracts and receivables will help make sure you’re getting the most out of your agreements. Over the last ten years we’ve seen so many get comfortable with these relationships. At the same time, they could become a source of capital that so many need in this uncertain moment.
While it’s absolutely critical to make the most of contracts, we recommend evaluating changes in light of your relationships, both with customers as well as vendors. Adding cash now while souring a relationship may not be worth the current and future challenges you might face. We have helped so many have compassionate, empathetic conversations that make the most of our relationships. At the same time, doing what is best for the business may require some challenging conversations as well.
Ultimately the question of managing these activities requires ongoing attention, especially during times of uncertainty. Unlocking resources, managing relationships, and making the most of the assets at your disposal require a disciplined approach that we have found is best realized using a 13-week cash flow template, available here for you to use!
We have all worked so hard to get to this moment. We hope with this brief pause you will take some time to make the most of your resources, and in the process position your company to make decisions from a place of strength. Coming next I’m excited to share with you how we use a few targeted “what-if” questions to actually make those sticky decisions.
Let’s get to the view at the top together. A conversation is the first step to clarity, so let’s chat.
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