Managing Liquidity in the Times of COVID19 Crisis

The Covid19 crisis is unique as it has significantly impacted companies across all industries. In Covid19 times, Liquidity Management could act as a survival vehicle. As it is famously said that ‘cash is the lifeblood of any Business’. The need for having sufficient liquidity by the companies can never be downplayed, in whatever scenario the company is. The problem encountered by the companies in Covid19 situation is not of revenue lost for the time-being, rather it represents a permanent loss of revenue. Moreover, it is not the timing difference of revenue which is worrying, but the unanticipated pressure put on working capital and liquidity which is making the companies feel orphaned in these times. The pressure on companies now is to arrange for urgency funding requirements, which is making the companies’ management and its bankers run head over heels. The companies with weak liquidity require a solution immediately and what could be anticipated as of now, is that, banks and other financial institutions will be reluctant in lending because they themselves need to improve their own equity position and increase their risk buffers. The economic downturn due to Covid19 warrants an entirely new way of thinking in terms of maintaining liquidity in the companies. This research paper gives inputs on how to take a grip on the given situation. It illustrates the key points to consider while managing liquidity in the COVID19 crisis. It also suggests, to not to lose sight of the fact, that this COVID 19 crisis will come to an end at some point. Companies should be ready with the potential to steal the market share when the things restart. Massive lay-off and deep cost-cutting today may delay the restart tomorrow. So be mindful today