Coronavirus: Business Impacts and Planning
The Coronavirus pandemic (COVID-19) is impacting our lives and businesses in a way that none of us have experienced before. The global economy is certainly impacted, and businesses and individuals are reacting to an uncharted situation that continues to evolve rapidly. Certainly, health and safety are our primary concerns. Business leaders have been forced to make difficult decisions related to employees, customers, and planning.
AAFCPAs has outlined some key considerations and advice for businesses during this time of severe disruption to our daily lives.
- Assess remote working capabilities and strategies. If you have not already, identify positions/activities that may be performed remotely.
- Can your information technology and infrastructure handle your employees working remotely?
- Are there operational changes that should be made to allow for more employees to work remotely?
- Identify travel and meeting plans in the next 3-4 months that can be postponed or changed to a remote event.
- Monitor the Centers for Disease Control (CDC) recommendations for changes to workplace policies and procedures.
- Determine if you are able to keep employees on, and for how long, if this pandemic continues to impact your business. If you are considering laying off employees, consider the financial implications from a severance and unemployment cost perspective.
Operations and Purchasing
- Assess your vendors and how COVID-19 is impacting their business. Will you still be able to purchase the goods and services you need, or do you need to identify alternative sources?
- If your business is down, consider changes to your operations such as closing or consolidating facilities, changing hours of operations or employee hours.
- Consider your abilities to provide services to your customers on a virtual/delivery basis if practical.
- Are there new products or services you can offer to your existing customer base that are relevant during this time of change?
- Keep in contact with your industry groups and peers to see how they are handling this situation. Are there creative strategies they have deployed which may help your business?
Financial and Liquidity
- Identify the impact ceasing or reducing operations has on your revenue and cash flow.
- Identify the impact volatility in the stock market has on your liquidity and operations.
- Determine the impact decisions regarding your workforce have on your financial performance.
- Determine if your customers/funding sources will be able to pay you in a timely manner. What impact will this have on your cash flow?
- For nonprofit organizations, determine the impact the pandemic has on your fundraising and timing of fundraising events.
What Else Should You Do?
- AAFCPAs advises clients to prepare a monthly financial forecast for the remainder of your fiscal year. The forecast should consider what impact this has on your revenues, cash flows, and financial performance. Your forecasts should also include contingency plans in case this situation extends out to identify what you should do and when.
- You should ensure your management team and governance is engaged and in constant communication to strategize.
- Clients are encouraged, if necessary, to consider obtaining financing to support sustainability. There are loans available through the U.S. Small Business Administration and through several states that offer economic support to help small businesses and nonprofits address emergency needs due to the disruption caused by COVID-19.
- Talk to your lenders to see if refinancing is an option and to evaluate what impact this current situation may have on your loan covenants.
- Revisit your current and future investing strategy and liquidity needs.
- Track and monitor the impact this pandemic is having on your revenues and expenses. As we await the Federal government’s potential stimulus package it will be important to have a summary of these amounts to assess if any of the stimulus provisions could be beneficial to your business.
- AAFCPAs also advises clients to review insurance policies to evaluate whether there is any coverage that would apply to any of your losses.
AAFCPAs is available to help clients understand the economic impact the Coronavirus is having on current operations and finances as well as your long-term sustainability.
Our Business & IT Consulting practice is available to assist with financial and operational changes required to support a more remote workforce. AAFCPAs Wealth Management is available to address questions related to investments and the current market volatility, or to evaluate the resiliency of your personal financial plan.