I was trying to avoid a post dedicated to COVID 19 but alas, it’s pretty hard to do that these days. Some of the principles I’ve articulated in others posts apply, but this post is a bit more of a “how to” guide for emergency cash planning.

Disclaimer: many of these suggestions are NOT for “normal course” or “business as usual” financial management. They are crisis steps. This is a crisis.

1.) Cash Planning = Survival

Some tech companies I won’t name promise not to lay people off…some consulting firms promise the same. Wake up – these tech companies have massive hoards of cash (some because of very creative tax structures), and many of the consulting firms are billing through their ears right now because they target in-need and CASH RICH large companies who can pay their bills. Most companies don’t fall into these two categories (if you do, let me know so I can put a “donate now” button on my blog). This post is for the rest of you – may it help you live to fight another day.

Build cash fast. By the way, that means pulling down your credit lines and storing that cash in the bank. No matter what you are charged for borrowing that money, pull it into your bank account ASAP (NOW). Cash planning is everything.

2.) Make Money Moves

Cardi B hit the nail the head.

First – Shed the payroll you can re-hire, or go deeper depending on your circumstances. Every single head. This is hard, controversial and terrible for morale, the team, you as an executive or management team. The alternative is worse. If you over-reacted, join the club of millions of companies…they will likely forgive and come back to work if you need them. If you didn’t, you are protecting each and every employee you did not cut.

Second – Don’t pay rent, at least not this month, and probably not next month. If you want to engage in true judo, get your landlord on the phone (no one is probably calling their LL’s so you’ll be a welcome voice) and ask for a rent holiday – you might be surprised.

Third – your suppliers aren’t necessarily expecting to be paid on time so take that into account. In some cases, they might just be happy you’re still alive and ticking. They are doing the exact same thing you are (if you and they are smart), so you have a chance to work together to get through these times and come back stronger on the other side (especially if you make it and your competitors don’t – you’ll pick up market share).

Fourth – Factor receivables if you can – get that money. I repeat: Get. That. Money.

Fifth – Get aggressive on the collections front – give zero excuses to the well trained Accounts Payable person on the other end of the phone who has been told to hold onto cash. Cash in chips (no pun intended), relationships etc. to get paid – this is the time you’ve been waiting to draw down on your relationship line of credit. Remember…Get That Money (GTM).

3.) Don’t get Complacent

If you do “1” and “2” quickly, you will find yourself with a larger amount of cash on hand than you typically have. DO NOT let this lull you into a false sense of security. The receipts you used to rely upon to replenish that bank account are going to start coming in slower…and slower…and ?? You have less money than you think AND REMEMBER, some (much of?) it is borrowed money.

4.) Cash Planning = Forecast Liquidity NOW

Don’t care too much in the short term for what will happen to your margins, or to really any part of your P&L. It’s ALL about cash right now. If you’ve been income statement focused, make a pot of coffee and get acquainted with your balance sheet – it’s what will keep you alive if you’re going to make it through this storm.

Develop a 13 week cash flow forecast (refer to my post on this) – make more than one scenario – you have NO IDEA how things will play out so don’t put the burden on yourself to be the wizard who magically knows when this will end. Cash Planning = Liquidity Planning right now.

5.) Go on Offense

Now that you’ve got cash (due to excellent cash planning on your part), essential employees and know what the near term looks like, start dialing for market share dollars. Call competitors that might want to be acquired, call customers who might have suppliers that just disappeared (and need the volume), call suppliers if you think vertical integration is relevant for you. Do it now. Cash Planning can give you a strategic advantage that you should not let go to waste.

Do all of this now. Every second, minute, hour and day matters.