Crisis Management in Finance
A structured approach in four steps
The primary objective of any organization in a state of crisis is stability. The best and fastest way to obtain that goal is by following a fixed process and a structured approach. We support our clients with advice and a crisis management approach that consists of four crucial steps.
1. Identification. Crisis diagnosis
Establish a crisis management team that will coordinate all relevant activities. Map and prioritize all possible risks as soon as possible. One of those priorities should be to find out if you apply all available government measures to your company. Discuss possible solutions to control the biggest risks and mitigate their (financial) impact.
Time frame: 1 day
2. Preparation: Planning & organization
Having defined and prioritized the biggest risks for your organization will lead you to decide on a package of measures that make these risks manageable. We see many of our clients working on scenarios and cash flow forecasts, while they are still getting accustomed to working from a home office environment, trying out alternative business models. Start issuing reports to closely follow up these measures. These first measures, however, should be taken within a very short timespan.
Time frame: 1 week
3. React: Roll out & monitor your plan
If the risks don’t change: stick to your plan. Focus on the most important actions, making sure that the negative impact of the crisis remains low. Frequently monitor how the biggest risks are being managed, adjusting when necessary. Think for instance about monitoring timely payment of outstanding debtors, preventing incorrect or double payments to suppliers or timely organizing the back-up for employees that get sick.
Time frame: 1 quarter
4. Stabilize & Evaluate: Back to ‘business as usual’
Start to address the remaining risks. Eliminate the backlog. Provide good reporting. Think for instance of government compensation that needs to be verified. Think of monthly or yearly closings (including the establishment of certain provisions) that must be prepared and accounted for.
Evaluate this crisis and make sure you are better prepared next time. Most certainly, a lot of manual tasks could be automated in the near future.
Time frame: 1 year
What can TriFinance do for you?
Based on clients' experiences, we can help you identify and validate the risks for your organization using a detailed checklist. That will enable you to define the short-term management decisions to be taken throughout the business cycle.
Because risks and measures are company-specific, we will be happy to help you decide which measures and report are the best choice for your company. Contact us to make an appointment. We hope to see you online soon!