In a Cash Crunch? 3 Reasons to Hire Financial Management Consultants Now

Due to continued low commodity prices and the redetermination of reserve-based loans, many highly levered E&P companies are struggling to maintain liquidity yet are hesitant to bring in financial management consultants. In actuality, this environment is the ideal time to bring in the expertise of a financial management consulting firm. In times of business uncertainty, there are numerous options on the table to consider including financial restructurings, asset sales, taking on additional debt and also bankruptcy. While bankruptcy sounds like the scariest of all the options, often it can be the most effective in positioning the company in the most favorable position upon re-emergence. When considering these options, it is better to hire financial management consultants early on in the process for a variety of reasons:

  1. Financial management consultants can help your business weigh all options available and offer unique solutions to your business. As mentioned above, there are many ways to handle a low cash-flow environment and financial management consultants can help you weigh the pros/cons of each and formulate a tailored path forward for your business.
  2. Financial management consultants can proactively work with debtholders to get them the information they need. Additionally, financial consultants can work with debtholders around a potential default, or obtain a forbearance if needed, while aligning interests in order to create the most value for your business on a go-forward basis. In distressed times, debtholders will often require compliance materials from your business which may include cash-flow forecasts and any due diligence materials around a potential asset sale or other form of new debt agreement. Financial management consultants can provide assistance with all of these processes.
  3. In times of low liquidity, it is important to effectively manage cash-flows and maintain as much value within your business as possible until additional financing or a clear path forward is established. Financial management consultants can work with your business to cut costs, trim the fat, and establish a payment schedule that best suits all parties involved.
In conclusion, bringing the expertise of a financial management consultant to your business early on when cash-flows are light can help maintain the value of your business until times improve or an opportunity for a restructuring or other cash inflow presents itself.

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