There is a pandemic-induced problem that seems to be a temporary problem when it is in fact a semi-permanent problem due to the potential of being a recurrent problem in the post-pandemic world. That problem is jammed supply chains. We were used to traffic jams in major cities. Now we are getting used to shipping jams in major ports. Supply chains are jammed.

What is a supply chain? Basically, it is the processes and stages involved in getting a product to the final consumer. …

This is a general guide to post-pandemic business management.

Suppliers paid in advance (SPIA) are sometimes referred to as prepayments. Most operating expenses are prepaid (rent, insurance, subscriptions, etc), thus the term prepayments is typically used in reference to operating expense items. For trade businesses, ‘suppliers’ is a term typically used in reference to those businesses that sell items that are typically classified under Cost of Sales for the business, and some items that go to the balance sheet as assets.

The meaning of Suppliers Paid in Advance adopts the COS and Assets connotation to the meaning of suppliers. …

This is a general guide on post-pandemic business management.

Refunds are a thorny issue. There are various reasons why a customer might want a refund. It is a normal part of most businesses. In retail, refunds range between 4% and 8% of sales, and these are normal depending on the type of retail trade the business undertakes. In services, refunds are less common. For long-term products such as construction projects, refunds are unheard of unless something goes awfully wrong.

How is the post-pandemic business manager supposed to deal with refunds? Do you put a flat “No Refunds” policy? Do you…

This is a general guide to post-pandemic balance sheet management.

The greatest test on the probity of a business manager is income received in advance. This is also known as unearned revenue. A common accounting term is a prepaid income. I prefer using the long phrase “income received in advance” because it is more descriptive.

How a business handled Income Received in Advance (IRIA) before the pandemic has been a key determinant of business success during the pandemic and will be key in the post-pandemic business environment.

Examples of Businesses that face the IRIA test

• Tourism companies (travel agents, tour operators, safaris).
• Travel companies (airlines, tours & transfers…

The changing business environment implies changes in business risk. The post-pandemic era is a time of upheavals. Businesses that were once great could collapse in a matter of months, with new entrants taking place. Players in the B2B spaces must be aware of this. The risk profile of your debtors is changing. Players in the B2C spaces typically don't worry about debtors that much as most of the goods and services are provided on a cash basis as opposed to credit.

Companies that sell goods and services on credit need to reform the way they handle debtors in the post-pandemic…

Cash is not the king. Cash is trash. It loses 5 to 10% of its purchasing power every year. Cashflow is the king. It's all about how that cash flows in and out of the business. Why should cash flow out? Because it is very hard to make money without spending some money. Cash should flow in because you are running a business to make as much money as possible.

How cash flows in and out of the business is a process that needs to be managed. Failing to manage cash flow can easily lead to the death of the…

How do you manage the company’s balance sheet in the post-pandemic era? Do you increase leverage, or do you de-leverage? The general advice is to de-leverage. Reduce debt. This is generally sound advice which is generally true in most economic environments.

I would like to posit a slightly different theory with regards to leveraging and deleveraging. The decision to leverage or de-leverage should be viewed in the context of the wider macro environment. It should not be solely based on the analysis of the company's balance sheet. The decision matrix should incorporate national and global balance sheets. …

This is a general guide to managing risk in the post-pandemic environment.

Financial risk typically resides on the balance sheet. This is at times intertwined with business risk via the risk of the business not being adequately capitalized.

Banks and other financial intermediaries are pioneers and leaders in this regard. The ALCO, by managing assets in conjunction with liabilities, effectively manages risk. In fact, balance sheet management is risk management.

Two types of risk stand out in the post-pandemic era:

• Funding risk a.k.a Capital Adequacy — the risk that the business expands without adequate financial backing.
• Liquidity Risk — The…