COVID 19 Short Term Cash Management - Ernst & Young · Liquidität in der Krise aktiv steuern...

Liquidität in der Krise aktiv steuern

27.03.2020, 14:30 – 15:30 Uhr

COVID 19 –

Short Term Cash

Management

Ihre Gastgeber

EY

Co

vid

-19

Short

Term

Ca

sh

Ma

na

ge

me

nt

Carsten Jäkel

EY Partner

Global Treasury Services

+49 160 939 29356

[email protected]

Johannes Steinel

EY Partner

Corporate Restructuring

+49 160 939 12536

[email protected]

Tax & Law Covid-19 Update | Webcast | 20. März 2020 | Seite 3

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Regardless of whether a V-, a U-, or an L-shaped crisis is going to materialize,

the need for a continuous cash management approach will prevail

1 Solution at a glance

Crisis scenarios are real and impactful – however, there can be

positive learnings and takeaways in connected ways of working

Effective

Treatment

Containment

over time

Containment

within

Geography

Fast recovery and catch up - optimistic (V-shaped economic impact)

► Steep, but temporary dip in global economic development

► 2nd quarter rebound

► Summer will “heal” corona

► Effective treatment will be available quickly

The Year of Corona / Longer rebound(U-shaped economic impact)

► Uneven containment highlighted by supply and demand

disruptions

► Deep hit to global economy

► Treatment not effective immediately

► Recovery ensues towards end of 2020

Corona here to stay(L-shaped economic impact – pessimistic)

► Global recession, only long-term recovery, prolonged

lower global growth

► Longer-term reordering of supply chains

► Treatment only available long-term with humanitarian crisis

Scenario probability

55

%

10

%

35

%

Outcome depending on …

The rate of liquidity contraction grows daily –

companies currently suffer from a 3-fold liquidity squeeze


Trading Performance

Supply chain disruption(volume, switching costs

and contractual penalties)

Cost containment(discretionary spend disappears)

Capital investment paralysis(confidence impact)

1

Revenue contraction

Cash Velocity

Stock Building(low supply confidence

necessitates investment in inventory)

Trading contagion(customers at risk of credit default,

suppliers at risk of failure)

Cash Forecast Uncertainty(cannot rely on historic cash flow trends)

2

Cash conservation(businesses preserve cash – liquidity constraints

pass across trading continuum)

Soft Credit Crunch

Credit facility risk(credit lines can be terminated within 9 months –

lost funding and price increases)

General credit environment(banks general desire to withdraw credit

impacting unused facilities)

Volume impacts credit(debt factoring facilities impacted by

trading volume – less receivables to factor)

3

Withdrawn trading support(credit insurance & guarantees withdrawn –

draws cash into collateral & supplier funding)

There are four resilience actions that businesses are taking –

liquidity is clearly most threatening in the short term


Source: 5. EY Global Risk Survey 2020

• Initiate or expand flexible working

arrangements

• Provide infection protections for on-site

workers

• Issue regular, transparent communications

that reassure employees and align with

current government policies

• Consult legal teams for advice on potential

liabilitieswith governmentsor regulators.

• Evaluateshort-termliquidity.

• Assess financial and operational risks and

respond quickly.

• Consider alternativesupplychainoptions.

• Determine how the crisisaffects budgets and

businessplans.

• Monitor domestic and foreign government

initiativesof support.

01 04

02 03

Put people

safety first

Communicate with

stakeholders

Reshape strategy to

maintainbusiness continuity

Four actionsto build resilience and

reshape results

02 03Operate &

Communicate

• Scenario test adequacy of cash buffer

• Re-double efforts on cash forecasting

• Bring cash under central control and visibility

• Manage liquidity impact of disruption between finance

and operations

• Monitor customer credit limits tightly

• Tighten cash collection processes

• Maximise opportunities to reduce outflows

(e.g. permitted delays in tax payments)

Liquidity

Focus

79% Board members state

that their organizations are not

very well prepared to deal with

a crisis event 5.

Manage

Dynamically

• Establish regular cross-functional status

and decision meetings

• Confirm responsibilities and delegated

authorities under contingency

measures

• Agree trigger points for mitigating

actions

• Agree key measures for tracking

developments

• Keep trading mindset

• Keep customers apprised of impacts to

product or service delivery

• Stay in contact with suppliers regarding ability

to deliver goods and services

• Review terms and conditions on loans and

contracts with creditors and investors

• Consult legal teams for advice on potential

liabilities with governments or regulators

Four actionsto build resilience

Businesses have the ability to manage risks and impacts –

the sooner action is taken the more effective these mitigations will be


Review capital

market options

Defer non-

essential spend

Suspend tax

payments

Explore payment

holidays

Time to realise

Liq

uid

ity p

ressure

/

cash r

equirem

ent

Lo

wH

igh

Maintain existing credit and build

cash buffer where possible

Manage committed credit

Immediate Longer term

Regulatory and government support

Review asset

disposal options

Raise new debt

(asset backed)

Defer deliveries /

renewals

Defer pension

payments

Partner solutions

e.g. lessors,

suppliers

Repatriate cash

balances

Stimulate

customer demand

Use headroom in

facilities

Rollover LC’s/

guarantees

Build and maintain

cash buffer

Cut share buyback

and dividends

A/c receivable

financing

Review hedging

arrangements

Tightened Disciplines

Potential Upsides

Protect measures

Pause investment

plans

2 to 30 days 2 to 3 months

Rapid cost-out

Offer part-time

work and/or

unpaid leave to

employees

Close offices/

Lines/factories

Extend alternate

sales and delivery

channels where

possible

Short-term liquidity management is an integrated part of EY’s coordinated set

of crisis management initiatives, focusing on transparency, predictability, and emergency actions

2 Our approach

Coordinated response to COVID crisis:

Ensure organized crisis response► Set-up crisis management team and identify key

stakeholders

► Define information flows & prioritize communications

► Connect with local authorities

► Uphold critical business processes

Rapidly gain transparency on the situation and

evaluate own exposure

Crisis management

Implement organizational set-up to help you

master the crisis going forward

► Identify available cash and due payments

► Keep track on demand indicators (travel bookings &

cancellations)

► Evaluate effect of material risks and possible

► Obtain and update a reliable cash flow forecast

► Prepare and enact immediate “stop-the-bleeding”

measures, e.g.

► Working capital measures

► Make use of flexible work arrangements

immediately

► Evaluate the effect of temporary interruption of

service

Short-term Liquidity Management

Rapidly gain transparency on the liquidity

situation and implement counteractions

Employee Health and Safety

► Identify employee concerns regarding risk of virus

infections in workplace / client interactions / travel

etc.

Communication

► Prepare crisis communication in cases of employee

infections (internal and publicly) and clarify and

communicate services restrictions and cancellation

policies

Duty of Care and Communication

Identify health and safety risks and start

preparing communication

During the first three days, the identification of

material risk areas and risk potential is key to

define necessary actions going forward

Rapidly identify material risk areas and assess

potential impact through e.g.

► Travel restrictions (e.g. travel bans or cross-border

travel restrictions)

► Service restriction (e.g. implementation of social

distancing measures)

► Political interventions (e.g. how to make us of

governmental support)

Conduct quick assessment of focus areas and

define concrete next steps

Identification of material risk areas

Based on our experience in cash-stressed situations,

we have extracted 12 key steps to rapidly stabilize cash flows within 2 weeks

2 Our approach

Top 12 guiding principles – Day 1 agenda:

1. Obtain total control on Group cash – draw all available unutilized lines including subsidiaries‘ local banks

2. Create full transparency on Group-wide bank accounts incl. direct access to people who manage accounts and execute

payments – maximize # of bank accounts covered in TMS

3. Detailed view on which amounts are restricted (blocked, trapped, JVs, etc.) and, vice versa, which amounts are freely

disposable on Group level

4. Direct rolling 13 week cash flow forecasting covering major entities (80/20 approach required as it won’t be feasible to set

up a full-scale 13W CFF covering 100+ legal entities)

5. Weekly cash desk to approve & execute key collections & payments based on standardized cash reporting covering major

entities (80/20 rule)

6. Group-wide communication regarding payment approval & execution process and reporting requirements to Group level

7. Early payment incentives to key customers (again, 80/20 rule)

8. Weekly evaluation of due payments and payment decision based on (1) strategic importance of supplier and (2) ability to

negotiate better terms later – discontinue rental and social insurance payments

9. Capex freeze – key challenge here (as with 2.) to enforce this initiative throughout the Group

10. Sell off finished goods stock wherever possible (even at prices below costs) – depending on BU

11. Repatriate local decentralized cash amounts on a weekly basis (cash calls) – intercompany financing is being executed

upon valid local cash forecast only

12. Create standardized lenders cash reporting to support (or save, for that matter) the refinancing process

By o

rde

ro

fp

riority

Cash Management Quick Scan: indicative timeline –

key success factors are 100% cash focus, 80/20 rule, senior judgement

2 Our approach

Week 1 Week 2 Week 3-6 Mid-term actions

Liquidity

Management

Working

Capital

External

Financing

(1) Daily liquidity status - (2) weekly cash calls - (3) stakeholder-specific cash reporting (internal/external)

Process

Set-upWeekly pragmatic (!) cash forecast (80/20 rule applies) – scenario analysis per material entity

„Cash Culture“ – direct accountability and clear communication

• Retain full control on Group cash –

pragmatic forecasting

• Determine non-pooled (blocked or

trapped) cash balances

• Discontinue rental and social

contribution payments

• Evaluate master data (ledgers) on

overdues AR and FG stock

• Centralize data mining & analysis

• Reduce cash outflows

• Negotiate extension of payments

• Draw any available line

• Secure local non-pooled bank lines

(draw & upstream)

• Apply for reduced working hours

benefit

• Centralize liquidity managemt

• Release restricted cash from

collaterals and JVs

• Repatriate local cash from subs

• Capex and Opex freeze

• Collect overdues AR

• Sell of FG stock (even below costs)

• Negotiate consignment stock

(suppliers and/or customers)

• Shift suppliers and stock from

stationary to online

• Start negotiations on extensions

• Obtain credit insurers‘ view

• Roll over LCs

• Prepare government aid data pack

(„KfW Darlehen“ & „Schutzschild)

• Manually upstream local cash

balances

• „IC funding based on valid cash

flow forecast only“!

• Prepare for „reeboot“

• Offer early payment discounts to

customers

• Negotiate payment terms

• Secure commercial banks‘ support

for government aid application

(credit com decision required)

• Get bondholders‘ buy-in

• Negotiate bridge financing until

government aid is available

• Improve forecasting accuracy

(plan-actual variances)

• Re-set IC funding process

• Treasury Risk Management &

Compliance

• Order-to-cash process

• Supply chain process alignment

• Transactional data mining

• Prepare post-crisis ramp-up

(seasonal inventory)

• Evaluate asset-based lending

opportunities (SLB, factoring)

Based a consistent short-term liquidity plan, indicative scenarios need to be assessed –

along different levels of distress and alternative financing solutions

2 Our approach

Initial

assessment of

the company‘s

situation

Valid underlying

business model

– considerable

cash risks from

current situation

Quick Scan

indicates

substantial cash

upsides

Quick Scan

yields

insufficient cash

upsides

Out-of-court

restructuring

Insolvency

Self

admininstration

(Eigenverwaltung)

Regular

proceedings

(Regelinsolvenz)

Valid underlying

business model

– well prepared -

no immediate

insolvency risk

Business model

was struggling

before –

amplyfied cash

risks due to

current situation

currentsituation 3 main outcomes

Government support

Refinancing support

Restructuring support

• Restructuring plan

• Headcount reduction

• Liquidty plan

• Project management

• (…)

Internal financing

requirements

External financing

requirements

alternative actions

Quick Scan

confirms

comfortable

cash situation

• Deferred tax payments,

• Short-term work (Kurzarbeit)

• Short-term liquidity assistance

• Protective Shield (Schutzschirm)

• KfW Loan

Treasury support

Refinancing support

• Financing strategy and lenders communication

• Secure existing financing

• Evaluate new financing facilities

Back to normal

An idealtypic short-term cash management process integrates all existing tools

like STCFF, Cash Desk, Working Capital, PMO, etc.

2 Our approach

13 Week Entity-basedRolling

Cash Flow Forecast Weekly CentralizedCash Desk

(…)

Working Capital„Speed Boat“ Approach

„Capital Edge“ Proprietary PMO Tool

(…)

Gesamtfinanzie-rungsstrategie

Um die Liquidität zu sichern muss eine tragfähige Finanzierungsstrategie entwickelt und mit der

Bestandsfinanzierung in Einklang gebracht werden

Zeit bis zur Umsetzung

Liq

uid

itä

tsb

ed

arf

Nie

dri

gH

och

Bestehende Kredite aufrecht erhalten und Liquiditätspuffer anlegen

Management zugesagter Finanzierung

Sofort Langfristig

Staatliche Unterstützung/Hilfsprogramme

Neue (Bank-) Verschuldung

(Sicherheiten)

Liquidität im Konzern zusammenziehen

Bestehende Linien nutzen

Liquiditätsforecasterstellen

2 bis 30 Tage 2 bis 3 Monate

COVID19 - Stresstest für die Liquidität

Kurz-/mittelfristige Liquiditätsrisiken

ermitteln

Finanzierungs-strategie entwickeln

► Bestehende Liquiditätspuffer prüfen

► Lieferantenkredite prüfen

► Mögliche zusätzliche Kreditsicherheiten identifizieren (pari passu zu berücksichtigen)

Bestehende Finanzierungen

sichern

► Plananpassungen/Covenantvorschau erstellen

► Hausbanken/Mandated Lead Arranger über Auswirkungen informieren

► Anpassungen von Covenants und Auflagen (insbesondere Beschränkung von Finanzverbindlichkeiten) ggf. Zinsanpassung, Tilgungsaussetzung

Neue Finanzierungs-quellen erschließen

► KfW-Liquiditätsprogramme

► Bank-eigene „Corona“-Programme

► ABS/Factoring

► Sale & Lease Back

24. März 2020

Sonderprogramm Corona | KfW-Corona-Hilfen I/III

In Deutschland werden Liquiditätshilfen insbesondere über die Kreditanstalt für Wiederaufbau

(KfW) abgewickelt. Eine Beantragung der KfW-Corona-Hilfen erfolgt über die Hausbank des

Antragstellers bzw. alternativ über Finanzierungspartner der KfW.

Überblick

Beantragung der KfW-Corona-Hilfen ab 23. März 2020 möglich

ERP-Gründerkredit

(universell)

(074/076)

KfW-

Unternehmerkredit

(047)

Alter:

max. fünf Jahre

Alter:

mind. fünf Jahre

Alter:

max. fünf Jahre

Alter:

mind. fünf Jahre

kleine und mittlere

Unternehmengroße Unternehmen

ERP-Gründerkredit

(universell)

(073/075)

KfW-

Unternehmerkredit

(037)

Sonderprogramm Corona | KfW-Corona-Hilfen I/II

Förder-

möglichkeitBeschreibung Antragsberechtigte

KfW-Unter-

nehmerkredit

(KfW-Sonder-

programm

2020)

► Darlehen von bis zu EUR 1,0 Mrd. (je Unternehmensgruppe) für Investitionen

und Betriebsmittel

► Unternehmen/Frei-

berufler mit Sitz in

Deutschland und die

seit mindestens fünf

Jahren am Markt aktiv

sind

ERP-

Gründer-

kredit

(universell)

► Darlehen von bis zu EUR 1,0 Mrd. (je Unternehmensgruppe) für Investitionen

und Betriebsmittel

► junge mittelständische

Unternehmen, die noch

keine fünf Jahre am

Markt tätig sind

► Existenzgründer

► Freiberufler

Bestimmungen► Begrenzung des Kredithöchstbetrags

► 25 % des Jahresumsatzes 2019 oder

► Doppelte der Lohnkosten 2019 oder

► aktueller Finanzierungsbedarf für die nächsten

► 18 Monate bei kleinen und mittleren Unternehmen

► 12 Monate bei großen Unternehmen oder

► 50 % der Gesamtverschuldung des Antrag stellenden Unternehmens bei Krediten über EUR 25,0 Mio.

► Risikoübernahmen (Haftungsfreistellungen) in Höhe von bis zu

► 90 % für Kredite an kleine und mittlere Unternehmen

► 80 % für Kredite an große Unternehmen

Seite 6 24. März 2020

Sonderprogramm Corona | KfW-Corona-Hilfen II/II

Förder-

möglichkeitBeschreibung Antragsberechtigte

KfW-

Sonderpro-

gramm

- Konsortial-

finanzierung

► Beteilung an Konsortialfinanzierungen für Investitionen und Betriebsmittel

► Risikoübernahmen (Haftungsfreistellungen) in Höhe von bis zu 80 %

► max. 50% der Risiken der Gesamtverschuldung

► KfW-Risikoanteil in Höhe von mind. EUR 25,0 Mio.

► Begrenzung auf

► 25 % des Jahresumsatzes 2019 oder

► Doppelte der Lohnkosten 2019 oder

► aktuellen Finanzierungsbedarf für die nächsten 12 Monate

► optional Refinanzierung aller am Konsortium teilnehmenden Banken durch

KfW

► mittelständische und

große Unternehmen

Seite 7 24. März 2020

Ihre Fragen und Gesprächsbedarfe zu COVID-19 Maßnahmen

können Sie jederzeit im Nachgang zum Webcast an unsere EY-

Experten richten:

► Entweder nutzen Sie die Kontaktdaten Ihrer Gastgeber für

einen direkten Kontakt

oder

► Sie nutzen unsere E-Mail Hotline:

[email protected]

Dort gehen alle Anfragen zentral ein und werden schnellst

möglichst an die entsprechenden Experten weitergeleitet.

Ihre EY-Experten sind nach dem Webcast jederzeit für Sie erreichbar

www.ey.com/de

https://www.ey.com/de_de/covid-19

Seite 17

https://www.ey.com/de_de/covid-19/

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COVID 19 Short Term Cash Management - Ernst & Young · Liquidität in der Krise aktiv steuern...

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Transcript of COVID 19 Short Term Cash Management - Ernst & Young · Liquidität in der Krise aktiv steuern...