Securing liquidity and reducing costs in the short-term demands a particular skillset. Seizing opportunities that arise when a market is in crisis demands another. In this short webinar we will look at examples of the levers that might help you rapidly adapt your business to changing market situations – and discuss possible bold moves.

2. CASH COST BOLD MOVES
Safeguard your cash position
– employees, suppliers and
creditors all need to get paid,
even in a crisis
Be vigilant in terms of
adjusting your cost base to
your business activity level
(expected revenue drop)
If you have the financial
strength, now might be the time
to win new customers or drive
the M&A agenda

3. Inventories
Payables
Receivables
• Make sure you don’t buy
what you don’t urgently
need
• Make sure you don’t pay
before you absolutely
have to
• Be rigorous about
collecting
CASH
Be fast and be persistent

4. CASH
Forget your CAPEX budget
CAPEX Maintenance CAPEX Efficiency CAPEX
(optimisation)
Growth CAPEX
• Forget your budget
– review your
investment need
and approval
process
• Continue with the
minimum to safeguard
equipment, facilities and
other hardware or
software to ensure
functionality, productivity
and quality
• Postpone investments
that require large
change efforts
• Push efforts that can be handled
as small changes within existing
processes and routines
• Approve investments case by
case at board level, do not invest
according to planned budget

5. TO WHAT EXTENT
HAVE YOU DONE YOUR
HOUSEKEEPING?
POLL
Inventories
• Make sure you don’t buy
what you don’t urgently
need
Payables
• Make sure you don’t pay
before you absolutely
have to
Receivables
• Be rigorous about
collecting
CAPEX
• Forget your CAPEX
budget
Not at all A little
More
than
average
Very
much
CASH
LEVERS

6. • Create a cost overview and
establish central governance
of all costs
• Prune all cost items and
adjust to new revenue levels
- Review shifts
- Again, do not replenish raw
materials or other
purchases according to old
rules – decide on new stock
levels aligned with
projected new sales levels
Variable
COST
Quickly control and align the cost

7. COST
Even fixed costs are variable
Fixed salary cost
• Very few costs are truly fixed. Typically, “fast” initiatives are
- Open positions freeze
- Temporary collective salary reduction (and voluntary
unpaid vacation & leave of absence)
- Headcount reduction (right-size)
• Harvester – all units/departments by fixed %
• Activity value analysis to determine where to cut costs
(stop, reduce, outsource)

8. Salary cost
reduction
– when to use
which methods
Across the board,
voluntary salary
reduction (also unpaid
vacation and leave of
absence)
Right-size the
organisation – the
harvester method
• Ask all employees to take voluntary
collective salary reduction for
specified period of time
• Ask all business units
(departments/functions) to reduce
headcount by X%
• Quick implementation – impact nearly immediate
• Does the business “bounce back”?
• Is there demand for all resources?
• Strong element of solidarity
• Requires unified organisation
• Quick implementation – impact after a few months
• Revenue drop is expected to be long term
• The organisation can purposefully be trimmed
• Constructive cooperation from leadership team
• Risk of cutting in the wrong places
Right-size the
organisation –
activity value
analysis method
• Which activities drive resource use –
then evaluate all activities in terms of
eliminate/reduce/optimise/outsource
• Time required for analyses – implemented fast with
impact beginning after a few months
• Revenue drop is expected to be long term
• The organisation can purposefully be trimmed
• Risk of political process – objective analyses (often
useful to have third party support and benchmarks)
What is it? Considerations?
COST

9. WHICH OF THE LEVERS
DO YOU BELIEVE HOLDS
THE MOST POTENTIAL?
POLL
COST
LEVERS
• Temporary collective salary
reduction
• Right-sizing harvester
method
• Right-sizing with activity
value analysis
Fixed salary cost

10. • M&A considerations for
competitors in trouble – now
might be the time for that
bold dialogue about industry
restructuring. Could also be
value chain integration for
suppliers in trouble
M&A
BOLD MOVES
If you have the strength
Made 5 acquisitions from 2008 to 2010

11. BOLD MOVES
Make commercial opportunities
New customers Discounts
• Make new offerings to
customers with focus on
payment terms (cost and
reward balance)
• If you have the financial strength,
now might be the time to negotiate a
good offer from suppliers if you can
move a purchase closer in time or
guarantee volume

12. CASH
Inventories
Payables
Receivables
CAPEX
Safeguard your cash position
– employees, suppliers and
creditors all need to get paid,
even in a crisis
COST
Voluntary salary cut
Harvester
Be vigilant in terms of
adjusting your cost base to
your business activity level
(expected revenue drop)
BOLD MOVES
M&A
New customers
Discounts
…
If you have the financial
strength, now might be the time
to win new customers or drive
the M&A agenda
Activity value