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Managing liquidity and financing during COVID-19

Treasury responses for companies with cash flow challenges

How can organizations manage liquidity and financing given the impact of COVID-19? We provide guidance on treasury responses for companies with liquidity and financing challenges. Explore the issues and treasury levers your company can pull to take action during these unprecedented times.

The importance of managing liquidity and financing during COVID-19

Implementing liquidity management and mitigation approach is critical to providing short-term cash needs in the face of declining sales prospects. Many companies across a multitude of sectors are concerned that, due to deteriorating operating conditions, they may have insufficient access to liquidity and may potentially breach financial covenants, cutting off valuable sources of funding. Acting decisively is imperative to help manage global cash and financing arrangements.

What are some current cash flow issues?

The severity and term of adverse business conditions are unclear. The current issues include:

  • Drastically different cash flow performance of the business (reduced revenue, delayed collections)
  • Strengthening USD impacting the contribution of foreign operations
  • Concerns over whether there is sufficient capacity in funding lines to withstand a protracted decline in business performance
  • Concerns over financial covenants and other possible breaches may further limit access to funding
  • Out-of-the-money derivative positions given recent declines in interest rates and strengthening USD
  • Difficulties in paying suppliers and payroll due to short-term cashflow constraints

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Treasury levers to help manage liquidity and financing during COVID-19

To what extent have you assessed various liquidity scenarios and defined actions plans to pull treasury levers?

How we can help you with managing liquidity and financing during COVID-19

We’re here to virtually assist you with:

  • Developing dynamic cash forecasting and calculations of available weeks of cash, then estimating financial covenant compliance
  • Preparing liquidity scenario planning and stress tests
  • Providing technologists to accelerate cash visibility
  • Cash management professionals to advise on the mobilization of cash from around the world
  • Foreign exchange specialists to advise on resetting risk exposure, strategies, and existing derivatives
  • Experienced debt advisers to help with managing funding and credit rating impacts
  • Surge treasury resources to help with increased demands and potential impacts on workforce capacity from COVID-19

Even for companies that haven’t yet been adversely affected, we recommend proactively increasing cash visibility and control, and proactively managing funding, given the interconnected impacts of customers and suppliers.

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