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Calls for limiting discretionary spending and conserve cash

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Shady Salah – Media in Toronto

A Canadian economist has called for limiting the discretionary spending and conserve cash, noting that there are different options we can do to conserve cash.
Speaking at “COVID-19: Manage your cash flow and ramp up for business” webinar on Thursday,

Moderated by:

  • Jennifer Cooke

Corporate Lead, Women in Trade, Export Development Canada
Speakers:

  • Andrew MacMartin Partner, Audit & Assurance – Deloitte Canada
  • Alka Sood Senior Business Advisor, BDC Advisory Services
    Business Development Bank of Canada (BDC)

Andrew MacMartin, Partner, Audit & Assurance Deloitte, said “I like to break this down into three types one is spending on your growth. The other is the spending on the maintenance of your business. And then third is the transformation spending. And I think when you think about it, those three ways you come back to assess the payback in terms of the cash that you’re putting out. So ideally you want to really make sure that the cash going out is being, and that it’s increasing your profitability or it’s maintaining where you are right now for the next few months. I think you want to take a hard look at areas where you have discretionary spending, and you can maybe take some take some options there to cut back on certain areas, you know, looking at the, the orders that are coming in your inventory your safety stock. Looking at the credit that you have in terms of the lending and the rates. This is where the scenarios in real time really come in handy because you can set up different scenarios and a planning, so you can look at and we’ll get into that in a couple of slides where we have a nice visual, but you can get into looking at sort of where you are in terms of a cash position, looking at your cash inflows and your cash out, and then run different types of simulations to imagine well if I change this outflow by 10%. What happens if I’m able to defer these payments? What happens if I can get more lending does that get me through the next two months? So I think that in the mitigation strategies, you know, looking at what you can control, and the relationships with a lot of your, your vendors, and your bank, and your landlord. Your accountants is very, very important.”
“When we talk about managing on a daily basis. I think, you know, this is where the current state is really important. So you’re looking at, do you actually have visibility right now, what your cash position is. And then once you have that colour baseline projected out so that you get a realistic sense of where you’re going to be in 12 months time, you really want to try to get a step ahead. And I’ll talk a little bit about that later on.”

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