Financial Advice During These Uncertain Times

As the world goes through this global health crisis, we are all worried about our families, friends, and communities. For business owners and founders of startups, there are also financial concerns related to keeping a business going during these uncertain times of COVID-19.
While we don’t know when we’ll be able to return to ‘business as usual’, there are certain things you can do now to support your business until then. Everyone wants their business to survive this crisis, and as no one knows how long it will take to recover, you need to keep your cash and extend your runway.

Here are practical tips and guidance for startups and companies in Israel that can help you take care of your business right now:

  1. Review and check your business plans and budgets –  While they may have been approved previously, the situation changes everything now. Apply different scenarios to your budget and operational plans:
    • Top line scenarios: assume future revenues will slow down, as well; apply revenue scenarios to your model to better reflect ‘worst case’ scenarios
    • Head count (HC) and payroll scenarios: assume temporary payroll decrease and HC release (unpaid leave)
    • Funding options: if you were planning on funding rounds in the next 6-12 months, be prepared with an alternative scenario for your cash flow
  1. Check in with your customers –  Make sure they’re able to pay and make sure you’re able to collect open AR (account receivables).
  2. Keep track of fluctuations in the USD/NIS exchange rates – and manage it wisely. Remember, this is no time to speculate or gamble, so consult with your CFO and Board of Directors if necessary and take the right actions to protect your NIS future spend.
  3. Manage your cash flow carefully – prepare cash burn reports at least bi-weekly.
  4. Review your spending – Revisit any discretionary spending which can be delayed or dropped.
    If it’s not a must – don’t spend it.
  5. Have employees use their vacation accrual, if necessary.
  6. Consider salary reductions – for a few months or more to overcome the delay in sales/business. Make sure to consult with your CFO and legal counsel before taking this step.
  7. Revisit your hiring plans – and explore what’s important to keep in the hiring process, and what positions can be postponed. Unless it’s a must, don’t recruit new employees at this time.
  8. Don’t expand to new territories – now is not the time.
  9. Think mid- to long-term about your marketing and general travel plans –  We don’t know when this crisis is going to be over or what the economic climate will be in your target regions once it’s finally over, but you can plan your recovery: either a slow and gradual one or a speedy go-to-market strategy (depending on product maturity).
  10. Make sure you’ve received VAT refunds – The ITA has resolved to release all returns before the end of March, due to the current situation.
  11. Get refunds for any canceled or delayed conferences – you’ve registered for. Many conferences have been delayed to an unknown date – it’s better to get the money back and re-register once they’ve set a new date. It’s better for you to have the money and manage it, than keeping it with the conference organizers.

And just as important, don’t forget to help those who are less fortunate if you can.

We know this is a stressful time for all, but it’s also a time for management to demonstrate braveness – across all aspects of business.

Etti Hanochi, Partner and CFO & Hila Lebenthal, Head of FP&A

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