With the rising impact of COVID-19 being seen worldwide, all industries will face significant disruption to their supply chain, workforce and cashflow. By remaining agile and alert, business leaders can take steps to build resilience into their operations and mitigate the impact.
These are some key focus areas for businesses:
Cashflow and insurance
With changes and delays to your service, as well as falling customer demand, cashflows are likely to be strained. Therefore, creating a robust cash forecast is a priority.
A forecast will better enable you to speak to your finance suppliers about additional headroom and where it’s possible to relax operational covenants. Speak early and with clarity, to put yourself in best position with finance suppliers.
Take a look at the insurance cover you have, and whether you have a legitimate claim for this kind of disruption. Similarly, perhaps a successful claim could be made against your business for the cancellation of services or goods.
Despite the existence of business continuity plans, the speed and scale of COVID-19 has exposed gaps. You need to check you have sufficient resources and supplies to outlast the pandemic and whether you have space to store them. Creating a detailed understanding for where the critical points are in your supply chain, and understanding how challenges at points on the supply chain can be mitigated, will help you maintain continuity of supply.
Prepare for shortages and price volatility in products and goods not for resale.
Ensure your cyber risk policy is up to date and that it has be communicated to your employees.
Your IT network needs to have the capacity and bandwidth for your whole team to work from home at the same time. If there are large numbers of staff absences, your IT staff will may struggle to cope.
Review your key internal policies, including your sick pay system, health and safety rules, travel policies and how your employment contracts would cover forced absences from work.
Employees need to know where they stand and they trust messages from their business leaders – tone, accuracy and relevance can make all the difference to behaviour. Clearly communicate what your people should do if they feel unwell and tell them what is happening with travel bans, sick leave, homeworking, hygiene measures, annual leave and strategies to keep the business operating effectively.
Understanding your employees’ profile is also critical; consider the flexibility you have to deploy people into different areas of your business, or the balance of people focused on survival or ongoing operations.
Customers, suppliers and stakeholders
It's worth being proactive and engaging with your stakeholders early. Make sure you plan for the unexpected consequences of the coronavirus on your business. Think about whether you will have the working capital for when activity picks back up.
Inform your clients and customers of any changes to your services. Customers may need extended terms from you and some suppliers might require different arrangements.
Communicate early and often with your suppliers and check in with your stakeholders. Note too that a supplier’s supplier may face issues that have a knock-on effect on your business, so do your research carefully.
Tax and audit
With coronavirus having an impact on your profits and cashflow, you may need extra time to pay any outstanding tax debt. Enquire about whether you could get a loan or grant, or claim a business rates relief discount, to see you through the worst of the outbreak.
Think about if employee absence could cause you to miss a deadline to file. You may be able to delay audit dates or make arrangements for an audit using a virtual (off-site) approach. Perhaps you will need to reschedule, given the uncertainty.
A 'wait-and-see' approach is being taken by most governments in response to the impact on tax filings and tax changes in response to the economic effects of the coronavirus. While a handful of countries have extended tax filing deadlines to ease the compliance burden for taxpayers during this challenging time, many more have yet to announce changes and the situation is fluid and changing day by day.
The mid-market has always been uniquely resilient and companies are used to preparing for business interruptions. Those that can develop plans and successfully bolster themselves will be ready to re-bound when the pandemic has eased.
If you’re working through how to adapt to the evolving crisis and have questions about the impact of coronavirus on your business, you can discuss your concerns with one of our experts.
Monitor the situation
The Coronavirus COVID-19 situation continues to evolve and the advice to businesses on how to respond is constantly being updated. Make sure you keep up to date with credible news sources and speak to your local Grant Thornton member firm to discuss concerns and mitigations on your business.