Prioritise speed and collaborations
The speed of COVID-19's development worldwide is a huge challenge for businesses. The scope and impact of its implications have changed so fast that the responses many companies mount today may not apply any more the next day. The fear of not being able to keep up might render businesses passive or inactive, but this is what they should avoid at all costs. There is no use in waiting until threats materialise before deciding on a course of action. With unprecedented and unpredictable events like the COVID-19 outbreak, such threats will seem to materialise out of nowhere, and by then, it might already be too late.
To respond timely and efficiently to the financial risks and uncertainties that COVID-19 creates, businesses could run decision-making cycles frequently. Each cycle contains three phases:
- Analyse the most up-to-date external and internal information (including financial models, forecasts, and stress tests).
- Identify actions to mitigate cash flow risks.
- Prioritise the actions and carry them out.
As long as businesses could run decision-making cycles at reasonable tempos, they can adapt quickly as the pandemic unfolds and build resilience based on the actions that work.
Speed could again be a tough challenge here. Companies may have weak oversight of their workforce when most of their staff work remotely. Some companies may not afford to hire and train staff during the outbreak. Some companies may even have to downsize their workforce. At times like this, businesses could explore collaborations with third parties as strategic partners to ensure effective operation of functions such as accounts receivable.
A strategic partner in collections with the capacity to perform globally amid the COVID-19 outbreak could help companies:
- Adapt collections approaches to the development of the pandemic.
- Augment internal efforts to collect outstanding accounts receivable.
- Address accounts receivable issues and disputes.
- Aid the execution of companies' contingency plans to minimise cash flow risks.
- Make a plan for accounts receivable managing once the outbreak is over.
To cope with the upward pressure that COVID-19 exerts on the global economy, businesses need to develop the capability to improve cash flow and maintain financial flexibility. By assessing cash flow risks regularly and implementing effective measures promptly, they can be proactive and resilient in the face of the black swan of 2020.