Evaluate your client company’s contingency plan

Read your client company’s response, see whether it is consistent with lessons we learned in chapter seven and whether you can improve it by applying this week’s lessons. Elaborate at least in 200 words and cite the lessons from the Best Practices 7 assignment.

Business response to the questionnaire

Graponne

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one.

Our contingency plan include:

  1. Tighter control of our inventory levels
  2. Managing our cash. Making sure we have enough liquid reserves to get us through the downturn
  3. Limiting discretionary expenses. Including delaying intensive capital type projects.
  4. Keeping our team members fully engaged
  5. Making sure we have available credit (to finance cars that are not selling as well as lines to draw down for working capital). 

Bank of New Hampshire

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one. As previously mentioned, we build loan loss reserves and carefully monitor for signs of economic stress that may impact our business. We have sources of emergency liquidity available, and other similar tools to ensure the viability of the bank through a very severe downturn. Furthermore, we stress test our loan portfolios and entire balance sheet to determine how the bank would perform in various economic scenarios. This allows us to determine is additional reserves, liquidity, etc. are needed.

If a recession were to occur, understanding how to navigate your company is crucial. For the Bank of New Hampshire, reevaluating the company’s capital spending should be a factor in preparing for a recession. Making sure the capital to assets ratio is above a specific level and not decreasing before the recession is necessary. Cutting down on expenses and employment within the company needs to be taken into consideration. Looking at accounts receivable, having a tighter grip on credit value is key. Once the company is prepared for a recession, taking advantage of a recession is the next step. Observing other competitors’ in the same business as the Bank of New Hampshire can help navigate how to gain money. Looking back at the 2004 Washington Mutual layoff, other banks were calling their customers and the loan officers who were being laid off. Those are prime example of how other banks took charge during a recession to hopefully gain some profit in the process.
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Comptus

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one. We do not have a contingency plan for an extended recession.