Insights

MBG Middle East

COVID-19 Managing Working Capital in response to crisis

May 05, 2020

The COVID-19 pandemic has caused unprecedented levels of disruption and uncertainty for companies across all sectors and geographies. Most businesses now face weeks, if not months, of unique business environment. For most, the revenue lost in this period represents a permanent loss rather than a timing difference, and is putting sudden, unanticipated pressure on liquidity.

The need of the hour is to effectively manage your working capital. Business may have working capital locked in different components of the working capital like Accounts Payables, Accounts Receivables, Inventory, Advance payments, etc.

Sectors that will be hit the hardest

Businesses in sectors such as tourism, hospitality, entertainment and air transportation have been particularly hard-hit in the short term. Healthcare may be witnessing an increase in inpatient traffic but due to decrease in outpatients the revenues have nosedived. Businesses across the world are at higher than-normal financial risk, and those in seasonal businesses where demand may be lost (as opposed to shifted), such as such perishable consumer goods and seasonal apparel. Even commodity-oriented industries, such as metals and mining or oil and gas, are exposed as global demand shifts and pricing fluctuates.

Responding to immediate challenge-how can MBG help?

We at MBG Corporate Services have experience in helping businesses to overcome such crisis. Our Subject Matter Experts have an in-depth understanding of all major business sectors. This is combined with the best in class financial knowledge and expertise to provide businesses with the support required in optimizing their working capital needs during the current crisis. We can help the complete spectrum of companies, from organizations experiencing a cash crisis to those looking to protect their business continuity and those looking at how to best engage stakeholders around COVID-19.

Based on our understanding on managing crisis and black swan events, we offer the below mentioned Working Capital Management Services for your consideration:

Phase I – Diagnostic Review:

    Current Assessment and Redefining the approach for Working Capital Management

  • Identifying cash and cost benefits across entire value chain
  • Comparing performance against similar industry and identifying potential improvement
  • Redesigning Working Capital Management Process in following areas:
    • Inventory

    • Accounts Payable

    • Accounts Receivables

    • Supply Chain Finance Feasibility

    • Cash & Treasury (including Short Term and Long-Term Financing)

Phase II – Implementation:

  • Develop Action Plan for Effective Cash Management
    • Discussion and finalization with the management for implementation of newly designed working capital management process

    • Developing Action Plan to effective cash management and make sustainable improvements

    • Assist the process owners in order to enable successful implementation.

Phase III: Loan Restructuring:

  • Assessment & Support in Loan Restructuring
    • Finalizing the training schedule

    • Developing a training module

    • Conducting trainings sessions using the Train the Trainer approach

Our new services:

  • COVID 19: Business Process Improvement / Re-Engineering
  • COVID 19: Testing Business Resilience
  • COVID 19: Maximizing Your Working Capital Potential
  • COVID 19: Supply Chain Review & Optimization

GET IN TOUCH

If your business is encountering any of the issues discussed in this article, please do not hesitate to get in touch with our Working Capital Management team.

Esha D’souza
e.dsouza@mayurbatragroup.com

Designation: Associate Director

About Author:

Esha D’Souza has over 14 years of International experience across Internal audit, External audit, Internal controls, Risk management, AML and Fraud management and Investigation in India, Singapore, Qatar and UAE. She is a qualified Chartered Accountant and holds a Bachelor’s degree in commerce from Nagpur University, India.

Esha’s experience includes External Audit, Internal Audit, Compliance Audit and other engagements in various industries, including Banks, Financial Institutions, Real Estate company’s, Hotel Industry, Retail Mall, Educational Institutions, Charitable Institutions and Healthcare Industry. Esha has wide experience of Investigation and Forensic audit for Charitable Institutions and NGO’s.


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