The Need to Lead in Time of Crisis–Part Two: Cash Flow 101–Video & Article

News channels and financial experts are hard at work.  24/7 we are constantly bombarded with Coronavirus financial chatter.

Have we peaked?
How long will the financial recovery take?
How much wealth has been lost?  Will it be recovered?
Is it better to temporarily release or furlough employees?
Will stimulus checks lessen the impending recession?
Will there be another small business federal funding traunch?
____________ (Insert your own example of financial chatter)

All of this electronic clatter can easily clutter the mind of organizational leaders.  If we’re not careful, we find ourselves monitoring the chorus of global and national speculation, rather than focusing on the financial essentials of our own enterprise.

Certainly there are financial matters worth considering; these three are alarmingly important:

  • Over 22 million people are currently unemployed
  • 50% of small and medium-businesses have already laid off or furloughed employees
  • The median small-business cash reserve will only cover 27 days (JP Morgan)

In the middle of all the chatter and clatter, that last figure stands out!  “How big is your organization’s cash reserve?”  This is an essential financial question that leaders must ask and answer if they are to lead in this time of crisis.  No reserve, no cushion.

This article is designed to help organizations focus on one key financial metric, Cash Flow Projection in the Season of Coronavirus.

Alexander Resource Strategies would like to provide you with a practical worksheet to calculate the financial impact of the COVID-19 pandemic to your budget.

On our website, and within this article, is a link to a COVID19 Financial Worksheet.  This tool is offered free of charge to help your organization track and project its number one Coronavirus asset—Cash.  [BRAD INSERT LINK]

Here is how to use the worksheet and its built-in formulas:

  • Plug in your Original 2020 Budget Assumptions; make sure to identify available cash.
  • Plug in your Revised 2020 Budget Assumptions; make sure to identify changes in available cash.
  • Keep track of the impact of different revenue and expense decisions and realities.
  • Plug in CARES Act and SBA grants and loans and other one-time sources of revenue.

It is our hope that plugging your essential revenue, expense and cash figures into this worksheet will help you identify your financial reality, determine the impact of various revenue and expense decisions, and provide you with a cash flow projection to understand and manage your ability to meet your commitments to your employees, your vendors and your clients.

One more thing, once you’ve completed this financial homework don’t back to listening to endless financial forecasts.  There are too many variables, globally, nationally and locally.

Instead, leaders do better if they identify their own list of the financial drivers (both positive and negative) that affect their organization.  Savvy leaders will then plug those financial drives into a small number of scenario models to track the impact of financial performance under different conditions.  (E.g., if revenue stream A is reduced, expense B must be reduced; if expense C is increased, we may enjoy more revenue from program D).

We recommend using scenarios to understand and model your financial future (See Part Three of The Need to Lead Series is devoted to Scenario Planning).  We are not alone in that position, here’s what Boston Consulting Group’s Henderson Institute has to say on the matter:

Use scenarios rather than forecasts when the risks are large.  A forecast is a single version of the future, driven by necessarily narrow and deceptively precise assumptions.  Scenarios are multiple versions of the future with transparency of assumptions that allow you to continuously assess the progress against mental models of the situation.  They facilitate stress testing business models against plausible unfavorable futures, using a precautionary principle.  These factors contribute to better outcomes because uncertainty is explicitly factored into the decision-making process.

Let’s review.

Your homework assignment is to create a 2020 Cash Flow Projection.  If you’ve already completed the assignment, carry on.  If not, here’s the link to our Coronavirus Cash Flow Projection “What If” Worksheet.

If you would like assistance in populating the spreadsheet with appropriate figures from your budget, factoring in the financial changes you are experiencing, or understanding the realities presented by the worksheet (please note the graphing charts at the bottom of the worksheet), then please email us at:

May God bless you and your work,

David Alexander, President
Alexander Resource Strategies

Categories: Blog