FINANCE RECOMMENDATIONS FOR LIVING WITH COVID-19

Black Swans: Crisis → Opportunity

Crises like the COVID-19 pandemic can lead to seemingly impossible financial situations -strong economies have always historically recovered— but these troubled times offer opportunities and challenges that should be confronted head-on, strategically and looking to fortify your company for the future. Here are some finance recommendations for living with Covid -19.

1)     Review your business plan & financial models: As a “Black Swan” event, Covid-19 caught us all by surprise and its financial implications will run for at least three to six months.

2)    If you work in the information economy be aware that mass retrenchment is not the answer:

a)       It is very expensive and drains cash immediately

b)      People who understand our business are difficult to find and grow

c)       We will need those same people to help us rebuild

d)      Rebuilding will probably commence in 8 to 10 weeks, so we need to manage cash very tightly for 12 to 15 weeks.

e)      Each company must review its own business plan.

3)    Remember the difference between cash and accounting. Whilst accounting is always important, in times of uncertainty cash is king.

4)    Remain positive and communicate with staff, clients and suppliers. We are in uncharted waters and we need to be honest and open. Some conversations will be hard but they must be had. This is an opportunity to live by our core values and make us stronger for the future.

5)    If you cannot pay all of a bill, pay some of it to show good faith and communicate your strategy to pay it. Closing the door and not answering the phone will only result in black marks. For some of our clients we have had to put them on payment plans. One of our clients has already told its landlords they need to renegotiate shop rents to make them a percentage of turnover.

6)   Keeping staff and associates engaged in positive is essential in delivering our message to clients and suppliers; they are aware of what’s happening inside and outside the business. We need be truthful and reasonable with them.

7)    Business owners need work with their trade and professional associations and not be afraid to accept support from governments, suppliers and clients. We need be astute and commercial. We need to stay focused.

8)   The first type of support we can expect to see from government will be an expansion of deferral tax payments and soft loans. Both are effectively future commitments so we need to be careful but they may be available when financial accommodation is not available elsewhere. There is already talk of soft loans to employers and small business.

9)   We need get our accounts and business plan up-to-date, they will be necessary if we need to seek financial accommodation.

10)  If we need to borrow money, we need bank plans early and have the cash to pay fees associated with this. Borrowing will take longer than usual as finance brokers and financial institutions also have many people working from home plus are a lot more people applying at the same time! Be early before you actually need it.

11)  In times of uncertainty markets become “hard”. Commercial loan rates will rise and the fall of currencies, even if temporary, means that there will be inflationary pressures within the economy and correspondingly wage rise pressures, however, at least in the short term, these pressures will be offset by the fear of unemployment.

12)  We need to be calm, timely and consistent. Each day we must maintain our balanced work routine and be seen to be doing this. We need communicate a conscious message of optimism. We do know that the sun will rise in the morning.

13)  Communicate, communicate, communicate. In times of crisis we must communicate with empathy with our audiences, even if we don’t have all the information; communicate with transparency about sensitive information and; be ready to correct any mistakes until you get it right. 

Paul Raftery