Things were just fine. Low unemployment, low interest rates, healthy consumer spending and generally healthy industrial production and housing statistics streaming from your favorite news sources….a contingency plan seemed like the last priority.

Then all hell broke loose with an invisible enemy that the 24 hour news cycle can’t help you understand. Have a solid hoard of cash, a variable cost structure and no debt – cool, count your blessings because you my friend are a rare bird. For the rest of the world it’s a different story, and decisions must be made. Scenarios must be planned for, and many of those scenarios would have had you laughed out of the board room 90 days ago as a heretic chicken little. Most companies have only weeks let alone months of cash sitting around. Very little time was spent on a contingency plan.

Start with cash and yes, cash is king

Don’t look at your P&L for answers – accrual account and GAAP are less important than receipts and disbursements. IF you still have customers remember that vendors (you, perhaps your competition, their landlords, utilities), and employees are in line for a finite amount of funds.

Accounts receivable showing up is not a given. Don’t “run out your receivables” to determine inflows and let that lull you into a sense of security…people don’t have to pay you and guess what, if the hit is hard and bad enough they will feel more than justified to defer your payments until they have counted their fingers and toes. That AP you’re stretching (if you’re smart), is exactly what is or is about to be done to you. Your contingency plan should be rooted in a receipts and disbursements view of the world.

Your Contingency Plan – Act fast – get in front of it

Uncertain times are worse than soft economic climates – they are in fact completely different things. Uncertainty means being thoughtful about NOW, and about the upcoming NOW – no one really knows what tomorrow will bring. Things may not have gone off a cliff yet, but if you’re making plans during the storm my friend, you’re a day late and about to be many dollars short. You need your contingency plan baked and ready for action before “it” hits the fan.

Your title doesn’t matter a lot – CFO, Controller, FP&A, Plant Controller, Treasurer, etc…the buck stops with you. You need to be the control tower for all inflows and outflows. Communicate with the organization now, and then do it again, and then do it again. Assume you’ll need to soon…do it again.

Get out your credit agreements if you have any, draw down your revolving line of credit now before your bank decides to take it away. Review your rights, your permissions and your covenant levels with your banks. Don’t default on a technicality because you’re busy. That delayed set of financials or that delayed borrowing base certificate could give an anxious banker all the reason in the world they need to “get involved” in a big way…and not in a way that is going to help you.

Do a 13 week Cash Flow forecast

It’s your new best friend. Your 13 week cash flow plan is your contingency plan. Manage working capital now, we’ll talk more about that later too. For now, get a grip (a firm one), and get to a place of definitive plans you can execute if and when the time comes. Most importantly breathe, and inspire as much confidence and certainty as you can with those around you. You’re a leader and the organization you lead needs to hear from you with transparency and empathy.