Coronavirus impact analysis
Whilst COVID-19 has not been officially described as a pandemic, the economic and human impact can already be seen.
Treasurers should always be planning for the the impact of external factors upon the cashflow of the business. However this is often overlooked in the ‘good times’ then reactively responded to in a crisis.
A client recently registered to use our forecasting and planning tool ‘Vision’ to monitor their global enterprise group cash.
To quote them “We need to quickly model the potential cash impact of the COVID-19 virus upon our business by region, country, and division for 2020, by days, weeks and months”.
Not a problem we pointed out. As an enterprise client they had access to all the templates and models at no extra cost, and were able to start a new model with the ‘global enterprise cash’ template. We could then help them instigate this rapidly to allow their operating units to predict the impact in over 30 countries, using a combination of direct web input and data upload.
Once the data was gathered and automatically consolidated the treasury department could generate scenarios for best and worst case analysis over the short and longer term.
The forecasts are being contiguously rolled so that the ever changing position can be monitored. This is particularly relevant in any rapidly evolving and volatile forecast. One region might have a more serious downturn than others so seeing a central consolidated currency position broken into its component parts gives the Treasurer the chance to mitigate losses and manage global liquidity for the business.
Historically this would have been done via a simplistic unaudited spreadsheet distributed via email, and then manually consolidated. As is well documented, these spreadsheets invariably contain errors and are not to be relied upon.
There have been many studies of the economic effect of a Pandemic upon global trade as that by the European Commission Directorate-General for Economic and Financial Affairs showing a drop in GDP of between 0.8 -12.6 depending on the severity of the Pandemic.
“US health officials say coronavirus will likely cause a global pandemic” Feb 2020 Anne Schuchat, principal deputy director of the US CDC.
The impact of a pandemic can be catastrophic for a business, planning for a variety of outcomes is vital when monitoring risk and mitigating the outcome where possible.
Now more than ever, businesses need to have timely, accurate cash visibility and forecasting. A holistic and reliable SAAS solution allows for a much more controlled and responsive solution.
