Conduct a review to determine your financial situation. 

Cash flow projections should be created that take into
account different scenarios around how long it takes for
your business to return to normal, whether there will be a lending covenant
or other breaches in the short term that need to be addressed immediately,
and to deal with the new realities of your business.

There are also various financial ratios that will indicate the health and stability of
your business. Liquidity ratios measure whether your business can meet its short-term debt obligations while profitability ratios measure your business’s ability to generate income. Having this information will help you move in the right direction, prioritize spending, and make the necessary business decisions for your business.

Also, are your growth plans still feasible? Are your suppliers and customers still operating? The customer and supplier base may be different after the COVID-19 pandemic subsides.

Assess the situation

Stakeholders will be understandably concerned 
about the company’s cash and liquidity.

Consider communicating with them about changes to
financing agreements, access to lines of credit, and other
sources of financial support such as updated agreements with suppliers,
shareholder loans, and government relief programs.

Disseminate your cash and liquidity position

What is the plan for managing costs through the crisis
and eventual economic recovery?

Consider tax deferrals, capital expenditure deferrals, 
flexibility related to contract deferrals, or reviewing leases 
to see if all the office space you’re renting is still required.

You should also look for opportunities to restructure debt and use long-term financing instead of short-term financing. Invoicing customers much more quickly, putting long-term growth plans on hold, selling assets, receiving government incentives, and reducing overhead can also boost your liquidity. 

Adjust costs and expenses

Being agile and adapting to a changing business
or economic environment can give you a
competitive advantage.

Now is the time to improve systems, make strategic 
investments, and update your business plan to adapt to the new normal. Stakeholders will want to see articulated strategies around:

  • Supporting your workforce both with physical environment changes, 
    as well as productivity and mental health support.

  • Changes to your business model, where applicable. For example, is switching to online sales going to be a long-term change for most retailers? What’s the plan to move back if not? Are there overall changes needed for a post-COVID-19 world?

Pivot the business

As the economy begins to stabilize and reopen,
business will begin to recover. 

Therefore, you will want to conduct an enterprise risk
management assessment to help you prepare for any future
events that can affect your business and create a response plan.

This may also be an opportunity expand your business and look at potential acquisition opportunities. Additionally, it’s a great time to review the organization’s functions (such as IT or processes and controls) and take the opportunity to make changes that will benefit your company over the long run.

Think ahead

How BDO can help.
www.bdo.ca

Assess the situation

Conduct a review to determine your 
financial situation. 

Cash flow projections should be created that take into account different scenarios around how long it takes for your business to return to normal, whether there will be a lending covenant or other breaches in the short term that need to be addressed immediately, and to deal with the new realities of your business.

There are also various financial ratios 
that will indicate the health and stability 
of your business. Liquidity ratios measure whether your business can meet its short-term debt obligations while profitability ratios measure your business’s ability to generate income. Having this information will help you move in the right direction, prioritize spending, and make the necessary business decisions for your business.

Also, are your growth plans still feasible? Are your suppliers and customers still operating? The customer and supplier base may be different after the COVID-19 pandemic subsides.

Disseminate your cash and 
liquidity position

Stakeholders will be understandably concerned about the company’s cash and liquidity.

Consider communicating with them about changes to financing agreements, access to lines of credit, and other sources of financial support such as updated agreements with suppliers, shareholder loans, and government
relief programs.

What is the plan for managing costs through the crisis and eventual economic recovery?

Consider tax deferrals, capital expenditure deferrals, or flexibility related to contract deferrals.

You should also look for opportunities
to restructure debt and use long-term financing instead of short-term financing. Invoicing customers much more quickly, putting long-term growth plans on hold, selling assets, receiving government incentives, and reducing overhead

can also boost your liquidity and profitability ratios.

Adjust costs and expenses

Being agile and adapting to a changing business or economic environment can give you a competitive advantage. 

Now is the time to improve systems, make strategic investments, and update your business plan to adapt to the new normal. Stakeholders will want to see articulated strategies around:

  • Supporting your workforce both with physical environment changes, as well as productivity and mental health support.

  • Changes to your business model, where applicable. For example, is switching to online sales going to be a long-term change for most retailers? What’s the plan to move back if not? Are there overall changes needed for a post-COVID-19 world?

Pivot the business

As the economy begins to stabilize and reopen, business will begin to recover.

Therefore, you will want to conduct an enterprise risk management assessment to help you prepare for any future events that can affect your business and create a response plan.

This may also be an opportunity expand your business and look at potential acquisition opportunities. Additionally, it’s a great time to review the organization’s functions (such as IT or processes and controls) and take the opportunity to make changes that will benefit your company over the long run.

Think ahead