These are unprecedented times. COVID-19 is not only taking a human toll, but it is drastically impacting the economy, and consequently, your business. While business disruption preparation has historically been strongly advised as part of your strategic planning, when a crisis hits, it can be overwhelming to prioritize all that needs to be done. In this blog, we hope to bring some clarity as to what you should consider doing at this time to help your team and your business. Following these strategies will help minimize the impact of this crisis and better position your business for a quick rebound in the coming months.
Here are our top 10 strategies for you to immediately consider:
#1: Help your team
The health of your team, clients, vendors and other partners should be your top priority right now. What does this mean? Can your team work remotely? How can you ensure your vendors and clients are staying safe? Take care of them, and they will take care of your business. If your business is suffering now, and you keep this top of mind, they will all be there to support you when it recovers. Each day you should be contacting customers, vendors and employees to see how they are doing. This one act will buy tremendous goodwill for years to come.
#2: Create a 45-day cash flow plan
In any crisis, cash is king. If you are not able to create a 3- to 12-month cash flow plan, start small. Create a cash flow plan through the end of April. While this will impact some industries more than others, most businesses can expect to face some cash flow problems. You may need to consider some difficult decisions in times like this. For example, will you need to reduce or furlough staff? Will you need to consider salary reductions? Should you scale back production based upon current need? Once you have a handle on immediate cash needs, then focus on your longer-term cash flow planning. If you need help with this, contact us.
#3: Consider which bills to pay
If cash flow is tight, think about which bills should be prioritized for payment. Can you possibly defer paying some of them? If so, which ones? First, take care of what will keep your doors open within the constraints of any governmental restrictions, and then factor in non-essential items that can wait until your business returns to more normal operations.
#4: Talk to your vendors
This should be considered in tandem with #3 above. In order to protect your business, vendors might be willing to extend payment due dates. The larger the vendor, the higher the likelihood they will have more flexibility with their A/R schedule. Your vendor might be willing to do net 90 versus net 30, for example. It doesn’t hurt to ask.
#5: Review your Business Interruption Policy and enhance recordkeeping
Now is the time to review your Business Interruption Policy. Contact your insurance company and start asking questions. Even if you are unsure of your coverage, we highly recommend increased recordkeeping on the financial impact of COVID-19 to your business. One strategy is to advise your entire team to keep track of revenues lost due to COVID-related issues. We will be releasing a blog on business interruption tomorrow that will walk you through these action items.
#6: Call your bank
If you need cash flow help, call your bank. Consider drawing on your credit line or talk to your banker about deferring some loan payments, if needed. Banks are starting to offer revised payment terms and reduced restrictions to access credit lines during this time. You should also discuss with your banker if there’s an opportunity for them to assist you with obtaining a new SBA loan. If they are unable to help, ask them if they will not stand in your way of obtaining one elsewhere.
#7: Take advantage of the Families First Coronavirus Response Act
Under this act, covered employers can generally take a federal payroll tax credit for 100% of the qualified family and sick leave wages they pay each quarter. On March 20th, we issued a tax alert with details on what you need to know about this act. If you have any questions about this, please contact us, and we will walk through it with you.
#8: Understand the new unemployment requirements
Unemployment filing is being handled differently under COVID-19. Employers are required to file partial claims on behalf of their employees when reducing work hours or no work is available for a short period. Employers found in violation of this will need to reimburse the Department of Labor. If you have questions about this, contact us, and we can refer you to an Employment and Labor attorney who can help.
#9: Focus on keeping your operations team running
Think about your company’s supply chain. Do you have products that are delivered to your office or warehouse? Will this company still deliver under the current circumstances? Can your company answer phones remotely? What about payroll? Can you keep your IT systems running smoothly in a remote environment? For strategies on this, read our recent blog 8 Things to Consider When Shifting to a Remote Workforce During the Coronavirus Crisis.
#10: Keep a close eye on Washington, DC
At this time, Congress continues to iron out the details of the new stimulus package. Once it is passed, we will send out an alert with the highlights that will impact you and your business. But also keep tabs on what your state and local governments are doing during the pandemic. Just yesterday, Atlanta’s mayor announced a stay-at-home order, which does not include essential businesses, parks, the Atlanta Beltline or restaurants serving takeout. Stay informed to ensure you are complying.
During uncertain times, it is important to avoid taking a shotgun approach. Prioritizing your action items and creating a plan will give you peace of mind and provide clarity on what should be done next. We are here to help you along the way, and you can count on additional content from our COVID-19 Actionable Insights for Businesses Series with strategies to help you and your business during these difficult times.
Bert Mills, CPA, is the Managing Partner at Moore Colson. In his role, Bert sets the vision and mission of the Firm and works closely with the Firm’s leadership to drive and implement strategies.
Chris Tierney, CTP, CFE, is a Partner and the Group Leader for Moore Colson’s Consulting Practice. Chris has over 32 years of experience in providing financial, operational and strategic management, analysis, and advice to domestic and international companies and their stakeholders.