Contingency planning for a downturn in the economy: a treasurer’s checklist

Update

This update adds a number of points including the topics of “Going concern” and disclosures in a downturn, Making best use of available bank credit, Credit insurance, and counterparty risk and many small comments in other topics throughout the briefing note.

For those familiar with the original briefing note, a version of it highlighting the new entries with a black line in the margin is also available.

1 May 2008

This briefing note is intended to aid the treasurer in thinking about and planning how to cope with a downturn in the economy or sustained lack of liquidity in financial markets and the effects on your company. Even if your industry and company are in good shape, you will still want to review these notes when considering how your customers, suppliers, competitors and potential acquisition targets may be affected and how they may respond.

The briefing looks not just at the financial fundamentals including cash and balance sheet management, risk and funding availability, but also how the business strategy and plans may need adapting to new circumstance. Many points raised are good housekeeping at any stage of the economic cycle.