financial contingency planning · 21.04.2020 · cash management 8 download opus sample 13 week...
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STRATEGY – FINANCE - OPERATIONS
Financial Contingency PlanningProtect your Cash and Explore Financial Options
207.619.1899 | [email protected]
April 2020
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Panelists
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Jacques Santucci Opus Consulting Group
Andrew Wood Opus Consulting Group
Performance management consulting firm, celebrating over 10
years of innovating businesses at the intersection of Finance,
Operations, and Strategy.
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Opus Consulting at a Glance
Expertise & ROI
Ongoing Support
Small Business
WHAT WE DO WHAT WE PROVIDE WHERE WE’VE BEEN
▪ CFO & Controlling
▪ Cash Flow
Management
▪ Business Planning
▪ Financial Modeling &
Forecasting
▪ Turnaround
▪ Project Management
▪ Market Research
▪ M&A Support
▪ Organizational
Assessments
▪ Process & Performance
Clients & Projects
Our Presence
▪ Portland, ME
▪ Boston, MA
▪ Portsmouth , NH
[email protected] | (207) 619-1899
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Financial Contingency Planning; Protect your Cash and Explore Financial Options
An approach to financial contingency planning as COVID-19 is impacting
camp businesses, creating uncertainties for the coming summer.
1/ Contingency Planning steps: Accounting for the high uncertainty, An
Emergency checklist
2/ Cash Management: Understanding your cashflow drivers, Preparing
Financials & 13-Week Cash Flow Budget; Stress testing
3/ Coordination and Communication with all stakeholders (lenders,
landlords, investors, customers)
4/ Current Options and Opportunities: Financing options, assistance
5/ Q&A to follow
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7 Step Contingency Planning Checklist
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1. Create Awareness and Demonstrate Purpose
2. Protect Assets and Employees
3. Establish Focus Response Team
4. Conduct Stress Test Planning
5. Manage Upstream “Supply Chain, Vendor”
6. Manage Downstream “Customers”
7. Develop Plan with key management “Tabletop Meeting”
Source: https://opuscg.com/opus-webinar-financial-contingency-planning/
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Most businesses currently face 3 common challenges:
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Staff Banks Vendors Customers
All their Stakeholders are impacted1
Cash Flow is the major challenge for many businesses
Cash at Hand RevenueOperational
CostsDebt Service
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The end of the tunnel is an unknown
Current
Situation
Next Weeks/
Months
Ripple
Effects
Costs to
Restart
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We recommend structuring your plan to find solutions with each stakeholder
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CurrentNext
4-8 WeeksRestart
Staff
Bank
Vendors
Customers
Action Plan
▪ Action Items
▪ Urgency
▪ Criticality
▪ Cash Impact
▪ Trigger Events
▪ Responsibilities
▪ Resources Needed
Time Horizon
Stakeholder
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Cash Management
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Download Opus Sample 13 Week Cash Flow
Understand your Position
Look at your data, contracts, financial resources and understand your
options
Review your Cash Flow Drivers
Review your Customers, Programs and Communicate appropriately,
full transparency, start the conversation and ideally provide a plan
Plan and Stress Test
Build a 13-Week Cash Flow Forecast & Monthly Cash Flow
considering different Scenarios to assess your cash needs
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Cash Flow Drivers
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Sales
Costs Var./Fixed Costs
Staff
Balance
Sheet
Profit &
Loss
Debt Service
Accounts
Payable
Inventory /
CapEx.
Accounts
Receivable
Price
Volume▪ Alternative Channel /
Flexibility & Loyalty
▪ Discount / Reschedule
▪ Agreement with Staff,
Rehire, Foreign Workers
▪ Limit Orders / Delay
Purchases & projects
▪ Pay later / Negotiate
▪ Collect cash /
▪ Keep Deposits
▪ Programs, Materials
▪ Leases, Facilities, Utilities
▪ Non-essential exp.
▪ etc.
Examples of
Strategies
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Scenarios: What do we know about the coming season?
What if … LIMITED SPRING /FULL SUMMER
NO SPRING / FULL SUMMER
NO SPRING / LIMITED SUMMER
NO SPRING / NO SUMMER
PROGRAMS Reschedule, modify or cancel programs / New media / Outreach to other organizations / Staff, stakeholders / Loyalty & Alumni
REVENUE Reschedule rather than cancel, keep deposits / Modify Rates or Policies / Add programs in the fall / Partnership with other organizations
EXPENSES Adjust Expenses and Capex / Staffing and J1 Visa / Negotiate / Review all variable costs and inventory levels / Debt service
STAKEHOLDERS & CONTINGENCY
Communicate / Plan & Prepare / Impact on cashflow / Budget & Forecast 24 months / Funding and Assistance / New Camp Protocols /
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Financial Stress Testing
▪ What is it?
▪ High uncertainty requires considering different scenarios
▪ Scenarios can include business-specific and macroeconomic
assumptions
▪ Assumptions and Mechanics modelled in Excel spreadsheets
▪ Why is it necessary?
▪ Determine the financial needs of your business
▪ Help make the right decisions for your business (HR, Inventory,…)
▪ Address expectations of your creditors/shareholders
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Stress Testing – Demo
Simplified Stress Testing Tool for Illustration / 13-week cash flow or
Monthly Analysis When Necessary
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Be Proactive
Reach out to your bank, creditors, vendors and stakeholders in full
transparency, start the conversation and ideally provide a plan
Time is Scarce
Perfection is not required and can be wasteful, keep things moving,
keep lines of communication open , seek help and expert advice
Under-promise and Over-deliver
The lender is evaluating you on your trustworthiness, be transparent
and realistic, provide several scenarios when possible, lenders want to
help and will do their best to work with you
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How to talk to Stakeholders, Creditors and Lenders
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Long Term Solutions & Planning
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Avoid Eroding Value
Develop sound scenarios with the future in mind,
Emotional vs practical approach
Plan to Thrive
Ensure you plan for a permanent solution, understand your ramp up
costs, seek long term financing solutions
Seek Professional Help
Work with financial management and legal assistance, your Board, to
understand all available options
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Multiple Opportunities to get assistance and funding.
Option Categories
• Short term or bridge loans (direct, government assistance)
• Long term loans (bank, SBA guaranteed)
• Deferment, Forbearance, Payment reduction programs (private lenders,
vendors, agencies)
• Expansion of existing programs like Unemployment programs , Tax
credits flowing through to businesses
• Borrowing from / against an endowment
• Options for non-profits
Financing and Opportunities
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Small Business Administration Economic Injury Disaster Loan (EIDL)$2 million, up to 30 years, 2.75% / 3.75% int. Advance up to $10k.
Paycheck Protection Program (PPP) Payroll expenses and related. 2 years, 1% int., No guarantees. May be forgiven.
SBA Loan Payment Subsidy ProgramSBA covers principal, interest and fees on loans for a six-month period.
Main Street Business Lending Program4-year loans, principal and interest payments deferred for one year.
Tax Credits & Other Benefits for BusinessesPayroll tax credit , Expanded Paid Leave Programs, Payroll Tax Deferment, Net Income tax credit, Direct Loans, State Agencies lending, …
Contact us for more details or assistance / subject to change
Example of Loan Financing Options
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Conclusion
• Contingency Plans
• Multiple scenarios
• Cashflow Monitoring
• Re-forecast and Adjust
• Decision making process, Your vision and your business model
• Keep your Business Value and Think Long-term too
• Communicate, be Proactive and seek assistance
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Q&A
Jacques Santucci Opus Consulting Group
Andrew Wood Opus Consulting Group
207.619.1899
www.opuscg.com
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Disclaimer Statement
Presentations are intended for educational purposes only and do not replace
independent professional judgment. Statements of fact and opinions expressed are
those of the participants individually and, unless expressly stated to the contrary, are
not the opinion or position of, its cosponsors, or its committees. We do not endorse
or approve, and assumes no responsibility for, the content, accuracy or completeness
of the information presented. Attendees should note that sessions are audio-
recorded and may be published in various media, including print, audio and video
formats without further notice.
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