COVID-19 crisis and liquidity management – Meaningful perspectives by Eric Dalius

The global pandemic has disrupted life and also the economy. The government is responding to the COVID-19 crisis with economic stimuli and health initiatives. Business organizations and also corporate houses are all set to opt-in for the correct actions. They must secure employee health and stay relevant to the consumers. However, they should ensure that their business and also organization have a future. How a company’s CFO (Chief Financial Officer) and also finance team operates will impact its survival in the days to come. It will determine the company’s financial health, sustainability and, the capacity to bounce back from a global downturn.

Eric Dalius says that “right now” is the time to act

Eric Dalius, an entrepreneur, says that CFOs’ should secure the organizational liquidity during this crisis. However, they should focus on the two initiatives listed below to support the liquidity management and also finance activities.

1. Create liquidity control tower

Do you want your finance to the team to effectively manage operations, risk and also liquidity? If yes, they should set up and also retain a liquidity control tower, which offers an organization’s leadership with a holistic view of every liquidity aspect. It links the data associated with risk, receivables, inventory, cash-flow and payables via a 360-degree governance structure.

2. Integrate analytics and data abilities

The finance team should come up with systematic ways for managing the liquidity by making the most of analytics and also data. They also resort to smart decision making by using advanced scenario forecasting models. Such models are agile and also can manage outcomes and forecasts by quickly changing the scenario data.

CFOs must enhance and secure current financial sources. You should also do away with the pointless spending. Furthermore, CFOs should also make the most of a liquidity control tower for enhancing the cash-flow.

The other essential initiatives

According to Eric J Dalius, once the processes mentioned above are in place, the finance team and also CFOs can implement other crucial initiatives, like:

• Create a prototype for working capital management

While leveraging information and also working on business lines, the liquidity control tower can create working capital pain points. For instance, it could be recurring late payments by consumers and the possibility of increasing the issues. The process takes place by anticipating invoices with an increased probability of disputes or rejections, owing to a mismatch in price-quantity or incorrect coded service details.

• Procurement based on insights

An organization’s liquidity control tower makes the most of the expenditure optimization capacities and also harmonizes with the procurement process. It helps to assess all the open purchase orders and also minimize the non-essential services. All these perspectives enable the CFOs to recognize significant areas and also designate possible commercial recognition of payment terms and also rates. It also comprises of the payment delay.

• Offer global cash management and visibility

Several companies don’t have cash availability in real-time and also an in-depth understanding of the potential of cash liquidity. Additionally, the liquidity control tower allows complete ongoing control and also visibility of all the liquidity decisions, backed up by cash management analytics tools integrating regulatory and also business insights. It can help to generate high value from the cash format as it frees up stranded capital in the short-run.

These are a few steps that CFOs and also the finance team can implement to manage a company’s financial health during the global pandemic.