Crisis Management Tools (NWC, Liquidity Models etc.)
What is this?
Crisis management in the realm of finance encompasses a suite of strategies and models aimed at ensuring the financial stability and resilience of an organization during periods of uncertainty or economic downturns. This includes managing net working capital (NWC), liquidity and cash flow models to mitigate the impact of financial crises and disruptions.
When would you need it?
Crisis management tools and models are crucial for companies facing financial challenges or disruptions in the market. Here are some scenarios where crisis management becomes essential:
1
Net Working Capital Management:
Your company is experiencing a downturn in sales or facing delays in receivables collection, leading to a strain on working capital. You need to optimize working capital levels to maintain liquidity and meet short-term obligations.
2
Liquidity Management:
Your company needs to ensure sufficient liquidity to weather economic uncertainties or unforeseen events. You need to assess liquidity needs, manage cash flow and identify sources of short-term funding to sustain operations during crises.
3
Cash Flow
Modelling:
Your company is facing disruptions to its cash flow, such as a decline in revenue or unexpected expenses. You need a cash flow model to forecast future cash flows, identify potential liquidity gaps and implement strategies to enhance cash flow resilience.