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5 financial recommendations to deal with the economic crisis

April 24, 2020

The management of your company with the profit and loss account and the cash flow is crucial for prudent decisions, specialists recommend.

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5 financial recommendations to deal with the economic crisis5 financial recommendations to deal with the economic crisis

The COVID-19 pandemic has caused one of the worst economic crises in modern Mexican history, which, according to experts from the IPADE Business School, will immediately have two negative effects on companies: a) Decline in sales at an unprecedented level; it is calculated between 50 and 70% and b) Collection problems.
Federico D’Cuba, Professor of Financial Management at IPADE Business School, points out that the current context will prompt most organizations’ leaders to think about what to do in the short term to survive.
D’Cuba points out that the management of the company with the profit and loss account and the present cash flow will be of crucial importance, since both financial statements provide a guide for prudent decisions that enable companies to stay in the market.
“Today the saying is more relevant than ever”If you can measure it, you can manage it. “. There is currently no point in making efforts to increase sales. People won’t buy because they prefer to save their money to meet their basic needs. “

Related: The secret of a good flow of money

In this scenario, D’Cuba recommends focusing on measures that meet two basic goals: reducing costs and / or generating or saving money. Clear examples are:

People won’t buy because they prefer to save their money to meet their basic needs

  • Try to be out of debt. In such a scenario, applying for a bank loan is not easy. With that in mind, some questions need to be answered clearly: How much money do I need? What will I use it for? What term do I need? What is the interest rate, what guarantees will I give? What cash flows will I generate to pay the loan?
  • “It is not the same thing to apply for a bank loan to buy a trailer that generates cash flows for the freight and allows me to repay the loan at short notice. than asking to fund slow or obsolete inventories, to settle a late-for-bad and bad debt portfolio, or to cover operating losses that don’t generate cash flow in the short term to meet the requirements, “warns Federico D’Kuba.
  • Generate cash. Collecting overdue portfolios or selling equipment or machines that are no longer needed can help ensure higher cash flow immediately.

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