COVID-19

Understanding the economic impacts on your business is critical. Our Business Services advisers have developed a seven step process to ensure the best prospects for managing your financials through this pandemic.

STEP 1 - Build a 12-month cash flow forecast - 3 months (weekly) and then 9 months (monthly) taking into account your COVID-19 circumstances. Include revenue impacts but retain committed expenses as-is for now - understand if you are cash flow positive. If not - understand your cash burn and your runway before existing reserves are exhausted.

STEP 2 - If you have a cash deficiency now or coming up, identify measures to reduce costs or increase revenue. Identify discretionary or non-business critical expenditure to eliminate. Identify overheads to defer, adjust or remove (e.g. rent, equipment leases, employee costs). Identify capital outflows to defer or adjust (e.g. dividends, bank loan repayments, capex).

STEP 3 - Engage with key creditors such as landlords, ATO and suppliers, explain your situation and attempt to negotiate stand-still arrangements where possible. An independent report from your accountant or financial adviser on your financial position will bring credibility and assist negotiations.

STEP 4 - Conduct due diligence on other capital sources, and engage with your existing financiers and consider equity sources - do existing shareholders have capacity? Are there logical buyers of your equity you can approach? Do you have assets that are non-core to realise in a short time to generate cash?

STEP 5 - Identify any local, state or federal government stimulus packages and support programs that are available. Identify how they impact your cash flow and apply where relevant.

STEP 6 - Develop a 90-day action plan incorporating the steps above. Include:

• Implementation of the cash flow measures identified (i.e. apply to financier for funds, negotiate with creditors for standstills, etc).
• Engagement with key stakeholders such as employees, financiers, landlords, customers and suppliers and remaining creditors to ensure they understand your position to continue business.

STEP 7 - Implement the plan and monitor regularly, updating your cash flow forecast in line with your 90-day plan.

There are many impacts from the pandemic to factor into your business operations. Our Advisory Services leaders suggest to:

• Review business processes
• Assess supply chain resilience
• Get updates on program and project management
• Conduct contract assurance
• Perform inventory reviews
• Check on all business insurances.

Another key operational consideration is that COVID-19 has fast-tracked digital transformation in almost all businesses. Ensuring you have a proactive IT strategy will be critical for long-term resilience, particularly one that addresses the growing risks in relation to cyber security and fraud.

Protecting your workforce and your clientele is a high priority, with three aspects to consider: 

Workplace health and safety

Organisations must take into account changed workplace health and safety compliance requirements for the foreseeable future, for both on-site operations and any work-from-home arrangements. There is also the need to continually monitor, adhere to, and communicate evolving public health orders and government restrictions.

Health and wellbeing

The personal well-being impacts of the pandemic are becoming more prevalent. This is an area where an organisation’s culture and employee engagement plays an important role. Organisations should have various support frameworks in place for employees to access, such as counselling services, health programs, buddies and mentors, and more.

Workforce planning

Recruitment is an emerging issue for many organisations. With heavy limitations on migration, the labour pool is smaller and there is more competition for skilled workers. This can introduce the need for organisations to alter their recruitment and remuneration strategies, and to place more of an emphasis on culture, retention, and succession planning.