home. Even those with a strong online presence suffered cash flow disruptions as delivery services seized up and online platforms prioritised essential goods. Turning off the cash outflow taps was always going to be much more difficult. Employees still needed to be paid; landlords were expecting rents; suppliers were awaiting payments; lenders were expecting interest payments. Cash was flowing out as fast as it ever was. On top of this, it became clear the cash implications of this crisis had long legs. Indeed, many retailers looking into the storeroom found themselves staring at a massive inventory overhang. Converting this inventory into cash (even at steeply discounted prices) would help shore up liquidity but not necessarily profitability. Those with online channels have been doing everything they can to move their products. Those without have seen their cash problems multiply. Building a bridge Thankfully, the Government has been stepping in to help businesses bridge that gap. Indeed, the primary aim of the Government’s emergency measures seems to be to help businesses keep cash on the balance sheet and creditors at bay. Unfortunately, Government support will not save every business. So what can retailers do to ensure they survive? The first rule of crisis management is to act decisively. This means prioritising your cash flow preservation actions into a few buckets: Action the ‘no regrets’ initiatives first. These are often fast and simple measures that rapidly reduce the cash demands on your business (i.e. supplier payment terms; government support initiatives; variable labour costs; reduce forward commitments).Consider ‘tactical’ measures that play to medium term cash preservation (i.e. Capex reduction; longer term strategic initiatives that will not benefit the business now; negotiate temporary deferral or waiver arrangements with landlords). Identify the ‘last resort’ measures (i.e. standing down staff; closing or reducing business operations; tactical bankruptcy or administration initiatives). Planning for the restart It’s important to remember that at some point, economies will come back to life. Consumers will start spending again. Those looking ahead to ‘life after COVID’ are planning now for their working capital and cash requirements to re-start their businesses. For some, it may take significant working capital and cash reserves to rebuild their inventories, rehire employees and reopen stores. Until the public health crisis has abated – cash flow will likely be inconsistent for some time to come. On top of this, we will likely see a permanent change in consumer behaviour as consumers globally rapidly accelerated into the digital world of e-commerce, all at once! This means that online retail just got turbo charged and bricks-and-mortar retail may not be as productive in a post-COVID world. The challenge is complex, and right now, cash reserves and lines of credit are being rapidly absorbed by many retailers seeking to protect businesses as they go into hibernation. The risk is that when it comes time to re-open, these businesses will be starting from a severely cash depleted state, having exhausted valuable reserves needed to re-establish lines of credit and sustain operating requirements as communities slowly come back to life. Long road ahead Some retailers will find solace in a tactical bankruptcy or administration. These businesses were stable and profitable before COVID-19. For many, it may be the only viable way to stave off the wall of creditors eager for payment. Others, however, will continue to push through. They may implement cost and cash controls to help improve their management of working capital. They may sell off existing stock at discount prices to reduce their inventory overhang and generate cash. They may leverage Government measures and pivot their business models in order to keep employees on the payroll and cash on the balance sheet. Perhaps most importantly, they will likely be working collaboratively with their suppliers, landlords and creditors to restructure their current debts and develop new (and hopefully extended) terms of trade in order to fund an eventual restart. These conversations will not be easy. Cash please… Clearly, cash preservation and cash management will be key to retail and consumer brand survival over the next period. But don’t allow yourself to become only focused on the near-term crisis. Plan now for the post COVID-19 world.  Our view of the market suggests that those that manage their cash with a long-term view are more likely to emerge from this crisis with their business ready for the new world. Those focused purely on today’s cash challenges may not be as lucky. Matt Darby is head of retail and James Stewart is national co-leader of restructuring services for KPMG Australia.