We hope that you and your close ones are fit and fine and are taking ample precautions to stay safe. We pray that we all emerge out of the current situation strongly and with good health.
We believe that health is very important, however at the same time we do realize the impact that the current situation would have on the financials and the Businesses. Thus in this testing time, following are some of our recommendations, which we feel will help you in overcoming the current situation:
ACTIONS TO BE TAKEN ON IMMEDIATE BASIS:
- HUMAN RESOURCE
We believe that every organization is successful because of the efforts taken by the team. Thus during this testing time it is essential that the Management should come forward and have a conference call or web meeting or other such interactions with the team members to give the comfort and keep them in confidence so that when the activity starts, the organization does not have to face staff issues. Discuss and let them be informed about the cash flow issues and inform them about the deferrals / waivers of the salary that the organization would have to implement to keep the business running.
- CUSTOMER INTERACTIONS
It is very important to be in continuous connect with your Customers. They are the ones who are going to give you orders to run the Business. Thus be in constant touch with them. Try to generate orders during the interactions, try to extract new Business out of them which you can cater. Wherever possible seek advance for new orders. Wherever required extend the payment terms to give comfort to the customer who are in need. Give your customers confidence that you are available for them.
- SUPPLIER INTERACTIONS
Interact with your suppliers, we know there would be some suppliers whose payments would be due and he would be approaching you for the recovery and the financial position is not supporting to you commit them anything. Discuss with them about the issue seek deferral in payments. Try to negotiate with the Suppliers on payment terms. If required offer interest on delayed payments at Bank Interest Rate. Place and keep orders of the essential products required when the activity starts to avoid delays.
- CASH FLOW MANAGEMENT
This is going to be the most important task that one will have to undertake post the current situation when Businesses start. We would hereby like to make the following recommendations with reference to the same:
1.Prepare a detailed financial budget for six months.
2.Send mails to Debtors for recovery, and in the said mail attach the MSME Registration certificate and communicate the fact to them that you are a MSME registered supplier and the dues needs to be cleared within 45 days.
3.If required offer discount to the Debtors if he is ready to make immediate payment.
4.Wherever possible seek advance from Debtors for future supplies.
5.Derive the optimum stock levels required for the Business and accordingly assess the current availability and orders to ensure that the money is not stuck in Inventories.
6.Assess the available Assets and Investments, wherever required don’t hesitate to take decisions in disposing them off to ensure the continuity of the Business.
7.If required discontinue the Ongoing recurring Investments such as Systematic Investment Plans “SIP’s”, Recurring Deposits “RD’s”, etc. to divert the said Cash Flows for Business operations.
8.Try and renegotiate terms of payments with the suppliers. Make partial payments to them to ensure the steady supply and to give them confidence.
9.Wherever possible seek deferral of old outstanding payments by offering to pay interest on the same.
10.Request for deferral / waiver of lease rentals with the landlords.
11.Make partial payments to your employees, defer the balance Salaries, take your employees in confidence.
12.Plan the Government dues pertaining to Income Tax, TDS, GST, Profession Tax, PF, ESIC, etc. It would be advisable to take benefit of interest trade off on their delayed payments. (This will have their own consequences if Government Departments in future take harsh measures on late payment of taxes and returns, Which can always be dealt with once the business is back to normal operations.)
13.Assess the current limits available with from the Banks, seek enhancements and moratorium wherever possible. If required try exploring the opportunity of takeover and enhancement form other banks if your existing banker is not supporting.
14.Focus on gradually increasing the Business and particularly on orders with higher margins.
15.Implement cost cutting measures to the maximum possible.
16.The focus should be on ensuring the continuity of the Business
START WORKING / THINKING ON THE FOLLOWING ASPECTS WHICH WOULD HELP YOU OVERCOME THE CURRENT SITUATION IN THE LONG RUN:
a)Think about the new line of activities / business opportunities which would be more profitable going forward. Start preparing notes for the same.
b)Introspect about the line of activities presently being carried out, if required start thinking about the suspension of the same, if the same is not going to generate profits in the long run.
c)Think about the Business organization restructuring – this may include activities like consolidation of different entities into one Company, starting of new entity for a new line of activity, hiving off a current line of activity into a new entity to unlock the value of the same.
d)Research on the foreign entities willing to outsource the production / services to India post current situation. There is lot of commentary on the said issue and people are keen on shifting their activities out of China to India.
e)Focus on raising Capital / Finances and doing collaborations.
We as your Well-Wishers and as your Consultants will be happy to help you in every possible way to overcome the current situation. We are just a call away for any of your issues.
Disclaimer: The above mentioned are general recommendations which we have complied considering the current situation. Its implication may vary from Organization to Organization. Kindly use your diligence in implementing the same.
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