Category: General Updates
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Hello P&G Alumni, If you’re seeking clarity on your career or life goals, are feeling overwhelmed, or simply want to be unstoppable, find out how being part of the wonderful extended P&G family can be a real advantage. Imagine having access to a group of trusted women leaders who share similar values as you; women who have ‘been there, done that’ and can help you break through the barriers that are in your way. Meet the P&G Alumni Coaches — women who have successfully led multi-billion dollar businesses and developed countless high-performing leaders. And now, they can be your allies to help you hone what it takes to fast track your career and life goals. We are offering a limited number of FREE CONSULTS. Be among the first to sign up. Please feel free to share this with your P&G Alumni friends. Let’s grow together. “Procter & Gamble and P&G are trade names of The Procter & Gamble Company and are used pursuant to an agreement with The Procter & Gamble Company. P&G Alumni Network is an independent organization apart from The Procter & Gamble Company.” Copyright P&G Alumni, All rights reserved. |
You can help unlock $25,000!
Women and girls around the world are challenging themselves in honor of International Women’s Day.
The P&G Alumni Foundation recently awarded a grant to United Way Ghana. Help us unlock a $25,000 Challenge Match from the P&G Women’s Leadership Forum, so we can do more.
“United Way Ghana continues successfully to implement a flagship program improving Basic Education. The addition of Adult Literacy and training enables us to not only improve educational outcomes for children, but opens up unimaginable opportunities for parents and caregivers to improve the family’s socio-economic condition.”
Janet L. Butler – Vice President, Africa – United Way Worldwide.
By Jose A. Alonso
This installment in the Synfiny Advisors series on crisis management will address the key actions to take during major economic and political crises that impact market sizes, availability of funds and that create a flight to safety ($), thus impacting soft currency countries resulting in high inflation and volatile consumer markets.
As a result of the Coronavirus pandemic, there has been a flight to safety, where investors move to strong currencies, i.e. U.S. dollars, thus resulting in the weakening of developing market currencies of 20-40% as happened to Mexico, Colombia, Peru, and other markets even before these countries were impacted by the virus. Next, we are exposed to closed businesses, low sales, lack of liquidity and reduced consumption. The perfect economic storm.
When faced with a perfect economic storm it results in lower sales, higher local production and operational cost and a devalued currency. Surviving these challenges requires cash – CASH IS KING – and the optimization of the balance sheet to avoid currency risks and to better utilize assets like inventory.
Did you have enough cash to weather the crisis? Do you have lines of credit available? If outside the USA, could you borrow in local currency?
If borrowing is available, that is a great move in soft currencies impacted by devaluation and inflation.
Where are your profit margins after you have been impacted by devaluation?
If your business has a margin of 20%, with a 20% devaluation (Mexico) and a 50/50 local to imported cost structure, you are starting the crisis with a 10% margin, if devaluation is 40%, you are at breakeven.
So, questions to consider when you are facing these cash challenges:
- Do you have a goods ystem tof orecast scenarios for margin and cashflow?
- Once you know what your margins are, do you need pricing?
- How well are you utilizing working capital?
- Receivables – could you collect sooner? If not, create an incentive for prompt payment, offering a larger discount.
- Accounts payable – is it possible to extend payment terms?
- Are you eliminating low moving and unprofitable sku’s?
- Could you avoid hard currency payables?
- Local sourcing – could you avoid importing finished goods, is it possible to locally manufacture?
- Cost savings – is it possible to reformulate? Cheaper products, trade down as there is less acquisition power?
Key Takeaways
Cash is king in times of crisis. Careful analysis and management of the balance sheet is of utmost importance. Avoid debt in hard currency. Incentives for prompt payment of receivables is a most. Localization in local currency of manufacturing inputs is critical. Careful attention is required to profit margins and cost reductions and or pricing are key in maintaining dollar-based profit margins.
For more information, contact Jose A. Alonso (jaalonso@synfiny.com).
Click here for the final part in our crisis management series.