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The next 13 weeks Written by Royce Prude, Cary Mailandt, Frank Walker  When the economy goes from a position of strength to one of uncertainty in a relatively short time, the pressure on your business is real and overwhelming. Understanding your cash flow should be a priority as you navigate your options. It takes cash, not book earnings, to meet your obligations and survive economic downturns. Using traditional accounting and finance metrics such as net income, net operating cash flow, and earnings before interest, tax, depreciation and amortization (EBITDA) can be misleading and dangerous during times of declining sales and economic calamity. If managed correctly, many businesses are able to increase their available cash at the end of a recession. This can be achieved through swift cost reductions and reduced investments in net working capital (e.g., inventory) while converting assets (e.g., accounts receivable) into cash. The analysis is analogous to an airplane taking flight requiring both speed and altitude – you must optimize both the balance sheet and operations simultaneously. To accomplish this, a thorough understanding of your operating cash cycle along with your fixed and variable cash obligations is necessary.  Start by developing a 13-week cash flow model A 13-week cash flow model arms you with a tool that highlights some of the critical decisions you must make during these turbulent times. It is a preferred analysis tool performed to give you and potential lenders insight into the next 90 days’ sources, uses and cash positions with the appropriate level of accuracy. For many businesses, 13 weeks represents a trip around the operating cash cycle and provides a detailed view of cash inflows, outflows and the ability to meet obligations as they come due. The answer of where cash is produced and consumed and the resulting expected cash position is analyzed in weekly detail over the 13 weeks. It will highlight areas of cash shortfalls in advance, so you are prepared to act proactively. The tool enables operational and capital decisions to be made with high degrees of confidence in situations of deteriorating business activity. This is especially relevant in our current environment, where uncertainty surrounding liquidity and solvency is leading to an acute need for visibility of cash availability to meet needs such as debt service, material purchases and payroll.   Use data to make informed decisions  All industries are affected by our current environment, so it is more important than ever to have the most current and up-to-date information. As a 13-week cash flow is assembled and updated on a weekly basis, detailed information is readily available in advance of the typical monthly financial close process in order to make nimble, informed decisions. This tool will allow you to make the difficult decisions that many of us will be facing over the coming days, weeks and months. These decisions and activities are likely to include: customer credits and discounts, fixed and variable cost reductions, supplier terms negotiations, lender negotiations, landlord negotiations, organizational changes, federal and state stimulus program applications and other such items.  We understand these circumstances are unique and unprecedented for you. Prioritizing your information as you navigate very difficult business decisions will provide a level of stability moving forward. The 13-week cash flow analysis will guide you in the near term as we continue to push forward.  
  Coronavirus preparedness for small and family businesses.

Understanding your business’ cash flow should be a priority when the economy goes from a position of strength to one of uncertainty in a relatively short time.

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The importance of cash flow during uncertain times

Baker Tilly has a practical yet proven approach to assisting financial organizations, leveraging industry and public accounting experience to support and enhance the role of your organization’s CFO.

Baker Tilly understands the office of the CFO and the unique challenges and complexities that accompany the leadership and execution of a high performing financial organization.

The role of the CFO has changed dramatically. In addition to ensuring regulatory compliance, overseeing management reporting and controlling transaction processing, the finance organization is often asked to support enterprise strategic initiatives in an increasingly competitive business environment.

Organizational leadership has turned to the finance organization to improve strategic decision-making, manage business risks, monitor and improve organization performance, and drive shareholder value. These additional responsibilities come at a time when the finance organization continues to be subject to more scrutiny and regulation than ever before, making it difficult to determine where to begin focusing improvement efforts.

As the role of the CFO continues to expand, precious resources within accounting and finance organizations have naturally become stretched to capacity. On top of inherent structural demands, certain events often drive the requirement for highly capable external teams to provide assistance when it matters most.

Our team has vast experience in serving accounting and finance organizations – from middle-market to large firms and from high-performing to underperforming organizations. We have a practical yet proven approach to managing projects, leveraging our industry and public accounting experience to support and enhance the role of your organization’s CFO.

Budgeting, planning, forecasting and analysis

Financial and operational management reporting

Performance metrics definition and scorecard development

Transaction support (M&A, carve-outs, spin-offs)

Dealing with contradictions between the inventory floor count and its books, a seafood distributor enlists Baker Tilly to evaluate the inventory process.

Forklift manufacturer enlists Baker Tilly for help in on-boarding new controller and creating an opening balance sheet after an acquisition.

Manufacturer finds efficiencies during acquisition

Looking for a more automated payroll processing solution, a healthcare staffing firm works with Baker Tilly to eliminate manual data entry.

Healthcare firm corrects errors, simplifies payroll

Baker Tilly leverages resources with extensive industry and public accounting experience to manage projects and assist financial organizations with the role of the CFO.

International companies turn to Baker Tilly for global foresight, insight and resources to help them stay ahead of, and quickly respond to, change.

Baker Tilly international service specialists help current and aspiring multinationals conquer new markets, successfully overcome challenges, and thrive across international borders.

Baker Tilly works with clients on mergers, acquisitions, capital sourcing and markets, project finance, due diligence, valuation and transactions

Baker Tilly works with clients on mergers, acquisitions, project finance, due diligence, valuation, capital markets, capital sourcing, and everything around a business transaction. 

Whether it is for an acquisition, sale or refinancing, Baker Tilly provides due diligence services tailored to meet your specific needs.

Anticipate and respond to changing business conditions faster than your peers.

Baker Tilly helps identify tax issues, opportunities and insight into alternatives that can allow you to make informed decisions throughout the transaction process.

Baker Tilly provides an integrated approach to transaction tax planning and execution, identifying strategies to assist with every phase of the transaction.

Baker Tilly’s performance optimization professionals help clients ensure that resources are aligned with strategic priorities and positioned for cost effectiveness.

Baker Tilly’s performance optimization professionals help clients make the most of their data financial and capital resources across a variety of complex operational environments.

Baker Tilly’s valuation professionals provide supportable, defensible and unbiased valuation opinions that can stand up to the highest levels of scrutiny.

Baker Tilly provides a wide range of companies with information on a broad range of valuation matters that are critical to their strategic and financial decisions.

CFO Advisory & Support

The importance of cash flow during uncertain times

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Baker Tilly understands the office of the CFO and the unique challenges and complexities that accompany the leadership and execution of a high performing financial organization.

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Case studies

Seafood distributor streamlines controls

Manufacturer finds efficiencies during acquisition

Healthcare firm corrects errors, simplifies payroll

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