We are all living in unprecedented times now in light of COVID-19, and successfully managing your AEC firm’s cash flow is paramount to making it safely to shore. BST Global’s Executive Vice President Javier Baldor joined a panel of AEC industry powerhouses — including Scott Stewart from IBI Group, Jon Kessler from Gannett Fleming and Cindy Milrany from Freese and Nichols — to discuss these unique challenges and offer tangible solutions on how to mitigate.
The webinar forum — Cash Flow in a Time of Crisis — covered a wide range of topics within the cash flow sector. Here’s an overview of some of the highlights.
- Cash Balances: How much cash should you have on hand to safely make it through the crisis?
- Roughly 30–60 days of operating costs, while it also depends on the philosophy of your business. Javier shared that BST Global went through an exercise in the past of determining how long the business could sustain if no revenue was coming in: “You have to aggressively save to survive a crisis of any kind.”
- Reducing Working Capital: What strategies are you using to bill more frequently, collect receivables faster and extend payables?
- Billing suggestions included billing weekly vs. biweekly; reviewing reasons for holding building more in-depth; using RPA for automated reminders; keenly focusing on meeting milestone payments; optimizing billing processes like the pre-bill review process, invoice-generation process, collection process, etc.; and more. “There’s a lot of blocking and tackling,” Javier said.
- Faster collection tips included leadership involvement; direct dialog with clients; moving collections responsibilities from Project Managers to Accounting, allowing more choices in acceptable payment types; moving to digital, reducing WIP, and more. “Don’t communicate by email,” Javier explained. “Call them and talk to them. People will remember how you treated them and care for them during hard times.”
- Extending-payables ideas included upcoming lease negotiations and bonus delays for leadership but the panel agreed that it’s important to keep vendor relationships positive.
- Cutting Costs: What ways are you looking to reduce costs to positively impact your cash flow?
- Adjusting staff hours, temporary and/or permanent furloughs, reviewing benefit plans for potential savings, looking at technology investments to save costs elsewhere within the business, building space reductions, reduction in company travel, increased focused on resource management and more were offered. “The overall approach to meetings is going to change completely,” Javier shared. “Meeting our clients digital with video conferencing is now wildly accepted.”
- Silver Linings: What has this crisis taught you and what will you keep in practice after the pandemic?
- Overall, the panelists agreed that hard times can show you opportunities to get better.
BST Global partnered with AEC Advisors to host this webinar, and AEC Advisors’ President Andrej Avelini also served as the event’s moderator.