Cash Flow Management by CFO During COVID-19 Pandemic
The COVID-19 outbreak is causing widespread concern across the world, many companies are striving to module proactive measures like stress tests to tackle the unprecedented supply chain disruption and risks. During this recession looming time, cash and liquidity are paramount for the business. Operating cash flow challenges during this pandemic creates unprecedented levels of disruption and uncertainty on a global scale. On hiring CFO services, you avail secure and strengthened financing sources and appearance by cutting non-essential spending. Many companies have not generated their revenue as much during COVID-19 pandemic. So, the main focus of a CFO is to manage the fund position and maintain the company’s liquidity and cash flow. CFOs leverage the liquidity to enhance income.
The four fundamental steps for strong cash management adopted by CFOs are:
- Cash management urges to understand your capital needs during this volatile slowing economy, focus on your daily cash needs and take a critical view of operations, existing income forecasting processes and understand how potential disruptions to operations may affect liquidity.
- Performs, scenario analyses on your financial and cash forecast and understand how that interacts with short-term liquidity needs. This exercise helps to shape any short-term management decisions.
- Strategically manage capital and minimize new inventory purchases to get cash. Take a critical check on payable outstanding. Assess cost requirements and defer non-essential spending if possible.
- Develops a cost-benefit analysis to combat the market conditions rather than cost-cutting on diminishing value.
- Review fixed and variable costs carefully and determine what costs you really got to run the business.
- Develop and monitor cost reduction initiatives by instituting policies that encourage and reward cost savings and conservation.
Evaluate Customers and Suppliers
During this economic crisis, businesses could see increased pressure on the purchasing power and credit-worthiness of consumers. The following points to ponder can help you for easy valuation:
- Make sure your customers are financially healthy
- Re-evaluate credit terms of every new customer before extending credit
- Continuously monitor accounts to gather receivables timely
- Negotiate for the foremost favourable credit terms with suppliers
- Critically evaluate your supplier base to work out if your current agreement remains the foremost favourable for your business
Communicate Priorly with Lenders
Communicate with your early and sometimes, explaining any situations plan to deal with them. Existing lenders might be your fastest source of additional liquidity. Engaging key stakeholder and lender discussions early can deal with your immediate potential financial challenges by availing the financial resources on time. It smoothens the business functioning during tough economic times.
Accelerate the use of Technology and Investments
- Real-time cash forecasting: The access to near-real time cash position data helps in modelling and analysis to simulate cash forecasts across a variety of scenarios.
- New technology enablement: The techniques like data, analytics and AI also as information extraction, dialogue management, fuzzy matching and reasoning.
- End-to-end investment and returns visibility: Availability of integrated data can help CFOs to initiate an ongoing evaluation of investments, revisit the returns of committed projects and reassess resource allocation, with all cash returns modelled to portfolio profitability.
Adopt an investor’s mindset and more innovative practices
Many CFOs highlight the importance of demonstrating capital discipline during this pandemic by translating an investor mindset into a day-to-day management style. That could also mean adopting innovative finance processes:
- Moving away from a typical, annual capital-budgeting process toward a more agile one with flexible budgets
- Quick decision making
Why choose CDA?
CDA Accounting and Bookkeeping Services LLC offers the best CFO service in Dubai and all over the UAE. Our skilled and efficient professionals help you in better financial management and business strategies. Our experience and our dedication are our assets, and that makes us different from others. We value your trust in us and will ride with you to take your company to overcome the impediments and accelerate to achieve your goals and fulfil you. Our CFO experts can assist you once you are stuck with decision making. CDA professionals will analyse your existing performance and will provide you with advice for the better performance in the awaited huge investment chance, and exploit the Investment opportunities for the visionary investors.
Also read, Importance of Hiring a Virtual CFO for your Business
Besides providing CFO services in Dubai and UAE, we offer various other services such as Accounting Services, Auditing Services, Vat & Tax Consultant Services, Implementation of Accounting Software Services. If you have any queries or need any of our services, feel good to contact us. Our expert will call you back immediately and will offer you a one-hour free consultation.
We recommend hiring an experienced CFO to manage your cash flow during this COVID-19 pandemic because an expert CFO can help you recover from the economic downturn through effective management of cash and your business finance.