1 April 2020 HALT - PLAN - REFRESH

COVID-19: Deploying and monitoring your working capital

In light of the ongoing COVID-19 crisis, the depressed business environment is expected to last a few quarters. Companies of all
sizes will need to be prudent with resource allocation.

Here’s how you can HALT and evaluate how to deploy and monitor your working capital
Estimate temporary reduction in fixed and Determine the borrowing requirement and negotiate
variable costs cost of borrowing
• Fixed costs: This includes electricity at office premises, • Evaluate if any external funds can be replaced with
suspended facilities such as cafeteria services, water internal accruals, reserves or factoring capability
and other utility consumption, warehousing, facilities of the business
provided to employees (cab services) etc.
• Variable costs accruing to reduced operations and
production, freight, contractual/piece rate labour, Project sales keeping in view the
distribution, transportation, transaction processing costs revised operations
and miscellaneous expenses incurred for • Estimate the sales to cash conversion cycle
business development, among others.

Estimate temporary increase in costs Assess the decrease in trade receivables for the
• Increased automation, health benefits extended to impacted period
COVID-19 tested and infected employees • Additionally, determine the potential
• Set-up costs of a new digital strategy, business continuity unrecoverable debts
plan (BCP), disaster recovery plan (DRP) etc.

Track costs with potential for negotiation with suppliers/ Value inventory stocked in any part of the
vendors/employees value chain
• Prepare a monthly tracker for costs to be incurred • Assess the sale value that could be attributed to the
• Conduct criticality of essential costs to identify the existing inventory at variable pricing
potential cost savings
• Reassess headcount and critical roles

Build scenarios around capacity utilisation Assess credit

• Basis the revised demand estimation, assess unutilised • Assess increased credit limits to customers and
capacity and determine any alternate use of reduced credit terms offered by suppliers
unutilised capacity
• Estimate the time period for which installed capacity
will be underutilised
• Estimate the fixed and variable costs
(as mentioned earlier)

The above steps can be used to create weekly cash flows along with sensitivities to plan the working capital requirement, utilisation
and availability.

Grant Thornton’s Business Consulting team can help you effectively deploy and monitor your working capital requirements to navigate these
challenging times.

​​​​​​​ more insights on the

For
Click here to download the recently released Grant Thornton COVID-19 crisis, scan this
Halt-Plan-Refresh Guide on revisiting business priorities and plans barcode to see continuous
updates on our website

© 2020 Grant Thornton India LLP. All rights reserved.

“Grant Thornton in India” means Grant Thornton India LLP, a member firm within Grant Thornton International Ltd, and those legal entities which are its related parties as defined by the
Companies Act, 2013.
Grant Thornton India LLP is registered with limited liability with identity number AAA-7677 and has its registered office at L-41 Connaught Circus, New Delhi, 110001.
References to Grant Thornton are to Grant Thornton International Ltd (Grant Thornton International) or its member firms. Grant Thornton International and the member firms are not a
worldwide partnership. Services are delivered independently by the member firms.