Quite a number of companies had 2020 plans prior to COVID-19 that stressed on the importance of deleveraging. COVID-19 has simply made the need for it that much greater. For businesses that are struggling with decreasing assets, the weight of debt can become burdensome. The first sign of a company being in trouble is not being able to make their debt payments.
The solution is to have a system plan out your baseline and put in a variety of different assumptions on what could happen if the recession ends i) in a few months, ii) by fall, or iii) in two years.
What’s the impact on cash?
FP&A can estimate what the overall company’s impact is from a P&L perspective. But only Treasury is looking at cash and can determine the impact. And that is what a true bottom-up cash forecast can do.