The ongoing COVID-19 pandemic, combined with global trade tensions, ongoing political elections, continued social unrest in some countries, and other risk drivers, has put tremendous strain on most organizations. Revenues that were once fairly predictable are no longer stable or even present, and organizations trying to navigate the crisis face previously unseen costs.

Assessing Cash Flow Challenges

COVID-19 and other recent events have affected almost all aspects of most organizations, making it challenging to pinpoint all potential variables that might affect cash inflows and outflows simultaneously. In this environment, finance leaders should consider taking a number of steps to obtain a better, more comprehensive view of organizational cash flows.

Questions to Assess Cash Inflows and Outflows

Two of our faculty who help lead the ERM Initiative at NC State recently co-authored an article appearing in Financial Management magazine outlining their thoughts about how organizations might tackle the challenge of forecasting the range of cash flow possibilities that may lie ahead for organizations. Their article includes a number of questions to help guide management’s thinking about sources of cash inflows as well as the dissection of several aspects of potential expenditures.

Cash Flow Forecasting and Scenario Planning Techniques

The article then outlines techniques for conducting different scenario planning analyses that can help management pinpoint the range of possibilities and it highlights forecasting and scenario planning software tools that may be useful to management.

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Related Resources

ERM Enterprise Risk Management Initiative 2020-11-02