Managing the Business Impact
In the wake of COVID-19, companies are witnessing various challenges in terms of increase in working capital needs and liquidity management as they support vendors who are likely to face liquidity problems in the near term and sustain the human resource capital and operations of the business. Many organisations are already dealing with these challenges that are failing their safety nets.
In times of these unprecedented obstacles that the businesses face, recently announced government assistance comes as welcome news. UAE’s Central bank is allowing banks to free up AED 50 billion from regulatory capital buffers to boost lending capacity and offering local banks to access a further AED 50 billion in loans and advances at zero cost against the collateral with the Central Bank.
While government assistance is promising, companies must also perform business health check to identify vulnerabilities and establish strategies to proactively mitigate any financial risks arising amidst the global crisis. A multifaceted approach that addresses organisation’s specific financial challenges, its market outlook and its chain of command will determine the best way of managing their cash flows.
- An independent assessment of operational and financial performance can help minimise the risk of business disruptions and formulate strategies to contain the identified risks;
- A supply chain management assessment to evaluate current operations, identify alternative supply chain scenarios and establish an ongoing operating capability;
- Liquidity Management and financial stress testing can help to develop short-term tactical liquidity strategies and improve visibility of short-term cashflow forecast;
- Scenario planning, revision of financial models can improve resiliency and protect growth and profitability;
- Establishment of cash-related key performance indicators, including borrowings and liquidity can uncover large and easily attainable saving opportunities that will allow business to unlock cash;
- Stakeholder Management can identify key stakeholders and focus on factually and effectively communicating with stakeholders;
- Corporate debt burdens can threaten business operations during this crisis. Planning debt restructuring and potential financing requirements can help to understand need for current debt requirements and its alternatives; and
- Restructuring or reorganising the business, or parts of the business, will help to realign the strategies during the pandemic.
As we consider the scale of change that the COVID-19 has engendered and will continue to impact in the weeks and months ahead, it is expected that cashflow management will become necessary to sustain the business operations of the business. Our experienced professionals offer business leaders a clear path to begin navigating to the next normal and plan stabilisation for their business.