IFE ADEDAPO examines strategies that corporate organisations can adopt 
to remain profitable in a challenging environment
The changing business terrain caused by the foreign exchange policy 
of the Federal Government through the Central Bank of Nigeria has negatively 
impacted the performance of many import-dependent businesses in the country.
This has also discouraged many foreign investors, forced many companies 
to close down while others left for other countries with better business environment.
The decline in oil prices from over 
$100 per barrel to about $40 per 
barrel has badly affected the revenue 
generation capacity of the government 
and created foreign exchange scarcity
 for other foreign business transactions.
These changes, which most business 
organisations did not prepare for, have 
placed them at risk, and made their
 businesses non-profitable.
In the banking sector, non-performing loans have become a huge burden because 
most of the credit facilities were taken by firms in the oil and gas sector.
A PricewaterhouseCoopers advisory outlook, titled, ‘Thriving in a troubled economy,’
 points out that organisations need to focus on cost-reduction strategies rather than 
sales and revenue.
It highlighted proactive steps to take to overcome the challenges, and they are:
 Renegotiate your debt
“What are your debt levels? Are you able to sustainably service them?
 Have you considered refinancing or restructuring your debt? This 
can be effective in alleviating the cost of repayments,” it notes.
According to the report, refinancing allows the borrower to replace an 
existing loan with a new one, thereby gaining more favourable terms in the process.
PwC says that debt restructuring involves modifying the terms of an existing 
loan, adding that it would typically be an effective tool in time of distress.
It explains, “In such instances, the lender may be willing to amend terms 
of the existing credit agreement such as extending the term of the loan, 
thereby reducing monthly repayments, waiving of fees, or a debt moratorium.
“After refinancing or restructuring, you should emerge with improved or 
restored liquidity and can therefore continue operations. It is critical however,
 that you are very clear about your earnings and cash flow capacity. It is 
equally important that you have a realistic view of your business’s sustainable 
debt levels.”
 Minimise liabilities
The PwC outlook indicates that it is essential that organisations stay on top
 of all liabilities once the process of debt refinancing or restructuring has been 
completed.
In an environment where the currency is depreciating, the report says it is easy to fall back into debt.
It explains, “You must ensure that there are robust systems and procedures in place to track and evaluate excessive debt, eliminate inefficiencies, and unlock cash.
“Accurate and timely reporting on debt is a prerequisite for the success of any debt management process. Reporting should be comprehensive enough to assist in drawing up a debt management strategy.”
 Monitor your cash flow
The advisory outlook says that critical areas in the cash flow to be monitored are account receivables, account payables, inventory and cash management.
It explains that it is time to revisit your debt management strategy and ensure 
constant and open communication with both customers and employees.
Other things to be considered, according to the report, are extended credit terms, 
ensuring prompt and accurate billing, introducing incentives for early payments,
 and tracking customer performance.
The report advises, “On the payables front, developing a detailed payment 
plan, that is updated regularly and which provides visibility on the timing of
 cash outflows, is essential. Importantly, have candid discussions with your
 creditors and if possible, renegotiate payment terms in order to avoid default.”
Take into cognisance foreign exchange risks
Proper planning and envisaging the future risks and opportunities are 
important when preparing a budget for the business, PwC says.
Once you have got a handle on your working capital, budget and plan better.
It points out that one of the risks to be considered is fluctuation in foreign exchange.
It explains, “By setting a budget that details the expected level of trading, 
the number of foreign exchange payments and likely timings of these transactions, 
along with realistic assumptions of future rates, you can minimise the impact of
 any exposure to currency fluctuations.
“It is important that budgets are carefully thought through, and adherence closely 
monitored. Historical variances in previous budgets should be analysed to 
identify potential improvement strategies.
“Depending on the size of your business, producing rolling daily, weekly 
and monthly performance reports which provide information on income
 and expenditure levels, profits and expected cash flows, will be crucial. 
A robust budget will enable you to adequately plan and monitor income
 and expenditure levels.”
 Cut costs
In order to reduce waste, it suggests that all business processes 
should be examined thoroughly.
According to the PwC outlook, any investments in making the business 
more efficient will make it more competitive and resilient in the short, 
medium and long term.
It adds, “Have all costs been cut to the minimum efficient level? Can 
expenses be reduced without the product quality falling? The systems 
and processes that drive your business operations must be meticulously 
reviewed to identify and eliminate inefficiencies.
“Often, it is discovered that costs can be cut from general and administrative 
functions without compromising the quality of goods and services provided.”

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