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COVID-19: Finance and liquidity

Managing cash pressures due to coronavirus disruptions

US economic activity is slowing as millions practice social distancing to stem the spread of COVID-19 (coronavirus). As a result, companies are either currently experiencing or anticipating significant constraints on cash and working capital, including potential liquidity challenges.

Cash flow scrutiny will be crucial in the days and months ahead, as will the speed at which the $2 trillion US economic stabilization package that passed on March 27 starts to flow through the economy. Managing cash pressures often falls directly on finance departments during a crisis. Executives will balance these pressures against the prospects for relief, as details continue to unfold about the stabilization package’s significant tax provisions and other measures designed to assist individuals and businesses.

Depending on the industry, many companies will see lower revenue resulting in less cash flow, along with delayed receivables collection, as needs grow to step up payables to important suppliers. Companies should expect to become much more nimble in managing inventory given the uncertainty in the supply chain, which will also place demands on working capital.

This guidance is based on our experience helping companies manage their global cash and liquidity position during times of high uncertainty.



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