Surfing for SMEs - liquidity as a swimming aid

What often seems negligible in good times can save the company in a crisis: Managing liquidity at all possible levels. To ensure that cash flows are also secured in the longer term, strategic considerations and measures must help to adapt to a new market environment.

The pandemic, which has truly global dimensions, has already left brutal traces on the economy. In the first quarter of 2020, Switzerland's real gross domestic product (GDP) fell by a moderate 2.6% compared to the previous quarter. However, this is just the beginning, as the lockdown mainly affected the second quarter.

According to a survey by SECO, consumer sentiment is at a historically low level. Rising unemployment will also have a dampening effect on demand. There are many question marks over forecasts for future developments. In Switzerland, the State Secretariat for Economic Affairs expects GDP to fall by 6.7% in 2020. This is a slump the likes of which has not been seen since 1975. The EU also expects a decline of at least the same magnitude. And the threat of a second wave of the pandemic is likely to brutally dash - quite justified - hopes of a speedy recovery.

Individual sectors such as the hospitality industry, the retail trade and tourism businesses have already experienced existential problems in some cases as a result of the ordered business closures. The extent to which chain reactions will now "infect" other sectors and businesses remains to be seen. In the same way, the development of foreign markets will have a considerable impact not only on the export industry, but also on the numerous supplier companies, with varying degrees of delay.

Building blocks for strategic and operational considerations

The importance of sufficient liquidity as the lifeblood of the company was already evident at the beginning of the lockdown. Where there are insufficient cushions, securing liquidity must be at the heart of crisis management. In addition to an analysis of income and expenditure flows, this requires a whole bundle of measures combined with the use of suitable planning tools, in particular a liquidity plan. The focus may shift depending on the company's situation. We have compiled possible starting points below.

Other instruments at operational and strategic level must also be used to ensure that your company is better prepared for extraordinary events. On the one hand, the focus is on dealing with the damage from the previous lockdown period. But it will be crucial to get fit for everything that is yet to come, be it waves, lockdowns or other imponderables!

Dealing with a completely changed market situation requires a great deal of creativity and energy, supported by systematic strategic considerations and instruments. Whether it's tapping into new customer segments and sales channels, price differentiation or varying your product range: perhaps now is the time to try something new! However, we recommend that you do not rush to implement such measures, but rather set up a suitable controlling system to optimize efficiency and effectiveness, especially in times of scarce resources.

Reliable long-term planning is hardly possible at the moment. Nevertheless, it is particularly important in this situation to plan cash flows in the short and medium term, ideally in scenarios.