Key Steps to Help Your Business Survive Shutdown
Paul Browne shares an article on stress testing and cash management as a means to help business survive another COVID-19 shutdown.
Cash Management and Stress Testing
The full force of the COVID-19 pandemic is now hitting the UK with most businesses either completely shut down or working well below capacity. Most law firms are in the latter category. The key challenge for managing partners, after ensuring the safety and well-being of staff, is to ensure the firm survives this hiatus, which couldn’t have come at a worse time with most firms year-ends fast approaching.
They need to ensure their firm’s cash flow is secure, that they stay within their credit facilities, and that the firm is able to trade profitably, if not immediately, then in the near future to ensure compliance with the SRA Code of Conduct for Firms, specifically:
2.4 You actively monitor your financial stability and business viability.
3.6 You notify the SRA promptly of any serious financial difficulty relating to you.
Firms should prioritise the collection and conservation of cash.
However, this can only effectively be done against the backdrop of an up to date cash flow forecast which is regularly stress-tested for a number of different scenarios, including the loss of significant time recording at least over the next three months, a dearth of new client instructions and clients, similarly, experiencing severe financial pressures, either unable to settle bills or looking for more favourable terms.
Key points include:
- Collecting and conserving cash
- Talking to your bank
- Alternative funding
Read the full article, COVID-19 Pandemic-Survival Steps for Law Firms, on LinkedIn.