Tag Archive: cash management

  1. Cash Management Post Lockdown

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    I don’t know about you, but if I hear another talking head on the TV using the phrase “new normal,” or read another newspaper article or blog post that suggests that anyone truly knows how business will change in the medium to long-term, I think I will explode. I plan to just build on my previous post on cash management and on the need to scenario plan as you continue to focus on cash-flow, which you and I both know is the lifeblood of every business. 

    Being too slow to cash is fatal for any business, and in the last two months most of you reading this will have already acted deliberately and quickly to take the necessary tactical steps to adapt your working capital, business expenses, and other cash outflows to be closer aligned with reduced short-term revenues and uncertainty around the immediate future, either to ensure the survival of your business, or as a sensible precaution during this national (and international) emergency. For many business owners, executive managers, and their employees, this was a very difficult time and required some tough decisions and sacrifice.  

    But as states begin to emerge from “lock-down” and you consider how you might ramp your business back up, you are probably coming to the conclusion that the next few months will be no less uncertain, and that navigating decision making in this (hopefully interim) environment may actually be even more difficult than what you had to go through during your initial pandemic response. 

    Therefore, let me offer up a few key things for you to consider as you try to model your cash projections for the rest of 2020 and beyond, and consider potential scenarios you may well face: 


     #1 Are you going to undertake M&A activity? 

    No judgement here: there may be a lot of good candidates for mergers or acquisitions at far lower prices than a few months ago that may represent good returns on investment and boost your top and/or bottom lines, or your current business situation might make you a good merger or acquisition target, or make you more open to merging or selling. 

    Outside of our typical cautions on the challenges of due-diligence and pre and post-merger integration, and of actually achieving projected synergies (meaning you will likely benefit from external help), you will need to factor M&A into your cash equations if it is potentially on the horizon. It might also be prudent to check in on your current and future potential credit lines, borrowing ability, and lending rates you might be able to achieve, bearing in mind that banks are starting to be more watchful in these areas, and have already factored large, pandemic related write-downs to their business loan portfolios in expectation of higher rates of business failure.  


    #2 Has the impact of changed Marketing Investment and Capex assumptions and budgets been reflected in other key assumptions? 

    If you have already made changes (i.e. reduced) your projected marketing spend or capital expenditures to manage cash flow, you have probably already captured the high-order effects of these changes in your cash position projections. However, you probably have not yet had the time to look at how these changes have affected other assumptions that have the previous capital expenditures embedded within them, such as Sales Growth, Cost of Goods, and Gross Margin. 

    If previously planned (but now cancelled or deferred) marketing spend or capital expenditures drove assumptions in the maintenance or achievement of positive improvements to your production or operational efficiency that then translated into top and/or bottom-line impacts in your original projections (and let’s assume they did, otherwise why were you planning to spend this money?), “backing-out” these embedded effects from your new projections to see how this affects your cash position might be a worthwhile exercise. This may well cause you to reassess your current best thinking on which projects to stop, slow, or carry on with, as you consider the strategic impacts, both internally and on your competitive situation, of your initial tactical moves to conserve cash. 


     #3 What if? (also known as “What else could go wrong?) 

    In order to make future financial projections you will need to make assumptions (Like you haven’t already) on how key expense and revenue variables will grow and change as lockdowns begin to subside. 

    No doubt, these assumptions will be based on complex interrelationships across myriad factors, from the obvious (such as customer demand, pricing, and supply chain issues and changes) to the harder to predict or more intangible (such as oil prices, when a Covid-19 vaccine will be available, the strength of the economy in the meantime, etc.), and across multiple stakeholders (such as employees, business partners, regulators, your local communities etc.). 

    Therefore, the opportunity to arrive at imperfect assumptions is high, without even considering “what else could go wrong” (i.e. other “black-swan” type events).  

    So spend some time, or consider getting some outside help (from Core Catalysts of course) to model a few potential scenarios or “what-ifs,” such as: 

      • What if revenue rebounding takes twice as long as projected? 
      • What if revenue only returns to 50% / 75% / 90% of what it was before? 
      • What if raw materials inputs and supply chain prices stay where they are (versus where they were) or were to increase 5% / 10% / 15%? 

    Projecting the impacts of these and similar scenarios on the financial health of your business and considering the odds that any, a combination, or all of these might happen will give you a sense of the medium to long-term risks that you may be facing, and help you to determine, change, or optimize your cash management strategy in the near or ongoing term. 

     While certainly not easy, planning for and considering these three factors can position your company to emerge stronger and as soon as possible from the pandemic, with the capability to continue to make both strategic and opportunistic investments. If you think you might benefit from assistance in refining your post-lockdown cash management strategy, give us a call to see if we might be able to help you! 

     Mark Jacobs, Client Service & Delivery

  2. Consulting Services Delivered in Today’s Crazy World – Part 3 of 3

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    A frequent question with potential clients recently is the ability to deliver value in a virtual environment. While we are providing targeted value for all our current clients virtually today, we will explore some of the most demanded services with the current economic environment in the last part of our 3-part series.


    There are existing methods we use that make providing our services easily consumable and still provide huge value.  We highlighted this with the first of several examples in part 1 where we covered Assessments and in part 2 with Cash Management and Forecasting types of projects.  We show a few more relevant examples in this segment.

    Transformation initiatives – where companies are taking advantage of the current business climate by revamping how they operate their businesses and position for large growth as the economy comes back online.  These services are composed of linking the business strategy to organization change strategies, major initiative definition and prioritization and fanatic program management to drive to results.  This is all supported by effective change management strategies that communicate to the existing team members that are buried in their caves around the city working remote.

    These engagements are delivered via many methods previously discussed in Part 1 and they also draw on our Program and Project Management skills defined below.  The engagements also require more face to face or video enabled calls especially for the Change Management techniques employed.  In addition, there are typically layers of reporting/dashboards given the various audiences involved with these efforts.  It is not uncommon to have 3-4 different reporting documents since these types of initiatives can have Board of Director involvement down to line manager involvement.

    Some transformation initiatives are based on new business directions while some are based on the underlying technology required to enable massive change.  Other transformation efforts involve Mergers and Acquisitions that require integration of company culture and organizations.  Needless to say, the more complex these get, the more difficult it is to handle everything using only remote techniques.

    Program and project management services – usually underpinning most of our efforts discussed above and in Part 1 is a heavy dose of program and project management services (what we are known for).  This is sometimes not visible to the end client other than the final results.  In most cases however, there are easily observed artifacts that can be developed and shared in a remote environment.  Some examples include:

    • Project charter documents – typically MS word documents with embedded diagrams and tables
    • Project business cases – a combination of documents and spreadsheets
    • Project Plans – can be developed with various project management software tools based on client preferences
    • Risk management logs – typically MS Excel based
    • Project/Program status dashboards – can be built from various reporting tools and depends on client preferences
    • Status reports – standard report templates modified for client specific needs
    • Issue management logs – typically MS Excel based though in some cases can be enabled by a trouble ticketing software

    As we covered in our first segment, all of this is enabled by tools and work processes that have been put in place and perfected years ago.  Each of our consultants operates in world of ‘have laptop, will travel’ and is accustomed to working remotely or at the client site.  The common denominator is that our team is focused on the goals of the project regardless of how the work is delivered day to day.  Our reputation is built on successful delivery of projects and a high level of trust with our clients.  We take that trust extremely seriously.

    This demonstrates with examples how our consulting projects can be delivered in today’s changing business environment and we have many more success stories beyond these.  Please don’t just ask us though, ask our many clients for their views on the work our team does, how we do it and the business results we help to drive.

    Jim Wadella, Managing Member

  3. CORE CATALYSTS Rapid Cash Management (RCM) Assessment

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    We’re all in uncharted territory with the Covid-19 pandemic.

    Companies that last through this crisis will have Executives who rapidly assessed these new circumstances, recognized patterns and opportunities, and acted with urgency to take immediate action to pivot and financially secure their companies. Those that don’t may not survive.

    Right now, your company’s responsibility as an Executive team is to do your best to ensure a solid financial situation for your company and to ensure your employees, customers, and vendors have what they need to minimize damage.

    Putting it even more bluntly, your company’s survival in this downturn can be captured in a simple formula:


    SURVIVAL =

    The speed and time to take to reach an understanding of the situation
    x
    The size and kind of pivots, cuts, and ‘lifeboat’ decisions you have to make and implement
    x
    The speed and time you take to make those changes


    It is unfortunate, because Core Catalysts has deep experience jumping in to organizations, running 13 week cash flow forecasts, and then identifying and implementing action plans to maximize cash flow, our five day Rapid Cash Management (RCM) Assessment™ playbook is readily applicable to those who are in a cash-flow negative situation, or who are about to enter one, meaning we can help assess the new normal and respond with speed and urgency …

    We have a proven approach and teams of experienced ‘hands-on’ people that mean we can help your organization align across all business functions, do the critical analysis and planning within the space of a week, and to start implementing, to make all of this achievable.

    Interested / want to find out more? Please give us a call at 913-752-9406 or click here for other ways to contact us.

    Mark Jacobs, Client Service & Delivery