“Corporate Resiliency: How to Ensure Financial Health Ahead of an Economic Downturn,” The Bankruptcy Strategist
Derek Meek and Hanna Lahr authored an article for the July 2020 issue of The Bankruptcy Strategist, a monthly newsletter from American Lawyer Media, discussing strategies for businesses to ensure their financial health – particularly as we face the economic downturn stemming from COVID-19.
As businesses look to weathering a crisis, a good starting point is to review the business’ annual budget and plan, and adjust that plan based on information and projections related to the crisis’ impact (e.g. drops in revenue). As part of that financial planning, “cash is king” in a crisis, so it is important to assess options to secure and conserve capital, including through expanded credit lines or budget cuts. Budget cuts could include adjusted relationships, such as renegotiating or ending contracts with vendors or reducing staff.
Finally, with these financial issues assessed to ensure resilience through the crisis, it is important to prepare a plan for transitioning out of the downturn. This includes planning for increased revenues when customer spending returns and identifying which business decisions made in response to the crisis could be beneficial in the long term.
The full article is available online here.