Overview of the Process - Stages of Financial Recovery
The financial recovery process has three basic stages:
Bridging. Getting through the immediate crisis and creating breathing room to make more sustainable reforms. This stage includes:
- Recognizing that financial distress exists and convincing a critical mass of stakeholders of the same
- Diagnosing the causes of distress
- Implementing retrenchment tactics to stabilize the situation
- Developing a recovery plan.
Reform. Carrying out the short-term recovery plan and developing and implementing long-term therapies. Reform includes:
- Developing long-term financial strategies
- Starting a formal long-term financial planning process.
Transform. Institutionalization of long-term financial planning and becoming more resistant to financial distress and adaptable to a changing environment.
- This condition is known as financial resiliency.
The precise steps of the recovery process will likely vary for each government as political realities, personalities, unexpected events, and other local circumstances require adjustment. However, it is GFOAs hope that the framework provided in this website will make navigating those steps a little easier.