It is important that businesses are proactive in assessing their capability to withstand disruption, from both an operational and a financial standpoint, and that they act decisively to mitigate actual or potential issues caused by the spread of COVID-19.
Companies could consider the following actions (where possible these should be coordinated by a central team):
- Provide guidance and support to employees and implement measures to protect staff;
- Stress test financials – reforecast trading and cash flows making sure to test and challenge all assumptions. Ensure trading and cash flow forecasts are integrated. Model a downside scenario to understand actual/potential needs should such a scenario arise;
- Cash flows – Some businesses’ cash flows are already being impacted as revenue dries up. Businesses should review cash flows in detail for at least the next three months and identify what mitigating actions can be taken to preserve cash in the short and medium term;
- Stabilise supply chain – understand your suppliers exposure and agree actions with them to address anticipated shortages e.g. sourcing alternative suppliers in other regions if necessary;
- Talk to your finance provider – review your current lending documents. Ensure that you understand the key terms, covenants, headroom and flexibility in these documents and speak to your finance provider if necessary;
- Engage Key Stakeholders – remain in contact with key stakeholders. Businesses should communicate regularly with key stakeholders including their finance provider and investors in order to address any current or anticipated challenges;
- Assess / Review contractual obligations with partners – it is possible that some partners are not in a position to fulfil their contractual obligations. This step may also provide partners with opportunity to attempt to renege on arrangements which, with the benefit of hindsight, they would prefer not to have entered into;
- Review insurance cover – your business may have insurance coverage for some of the losses that may arise from COVID-19. It would be prudent for businesses to conduct an early stage analysis of their insurance policies to ascertain what coverage may be available should it be required. In particular, consideration should be given to whether there are any specific notification requirements or obligations to engage with your insurer in certain circumstances. In addition, consideration should be given to whether your cover stipulates duties to mitigate any loss that your business may incur;
- Government support – a variety of supports for businesses affected by COVID-19 have been announced. It is worth understanding what these are and if and how your business can avail of them.
- Check out the Quick links section on Supports for businesses affected by COVID-19 page