Dispatch #1: Best Practice for Turbulent Times

This is the first in a series of short bulletins we will be sharing to help you navigate the coronavirus/economic crisis.
 
To start, below are five action steps most of our clients are implementing now:
 
1. Max out the line of credit in case the banks get nervous and restrict access to the line. But don't touch the money; see action step #2. 
 
2. Meet weekly (at least) around a 13-week cash flow forecast. Line of credit funds should only be used according to a well-thought-out, pre-approved plan by leadership.
 
3. Work A/R collections like never before. All the standard techniques plus lots of one-on-one conversations with customers.
 
4. Cut overhead next week. Example approaches could include:

• "We're shut down next week except for the owner and controller."

• "We're cutting office staff time (and wages) to 60% FTE next week."

• "We're going to pay people in full next week, then they start to draw down PTO and use unemployment."

5. Make short-term decisions. Make decisions for today, this week, and next week. The situation changes too quickly to make certain longer-term commitments.

Need help with this or other financial matters faced by construction contractors? Let’s talk!

David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.