The COVID-19 epidemic is causing chaos on businesses across the country. In times of hardship, finance is even more crucial than it is normally for a business.
Creating a comprehensive continuity plan and cash flow projection will allow you to continue operating, although at a reduced capacity, and will aid in recovery after the crisis has passed.
We have all been forced to adjust to what is going on, and we must do so. We hope that the measures below will provide you with the information you need to predict and manage on a daily basis, as well as help you to regulate your cash flow and build operational resilience.
- Start with health and security
Covid-19 is a human problem that requires a human answer, therefore let’s start with our people. Here are some crucial questions to consider.
Have you put best practises in place to keep your staff safe?
Determine the health and safety precautions you must take to avoid additional transmission for those of you who are still in operations. Implement the appropriate safe distance procedures, such as the usage of gloves and plexiglass barriers.
Can your employees work from home?
Allow your workers to work from home as often as possible to reduce interaction and preserve social isolation. Can you start selling on the internet? Can you provide your services remotely? Are you able to establish a delivery service quickly? Make every effort to develop solutions that will allow you to keep a percentage of your money while keeping your staff and customers secure.
Do you have a strategy in place for employees who have been quarantined?
What will you do if one or more of your workers becomes unwell and is unable to collaborate? Can someone else fill in for them? It could be a good idea, for example, to divide your crew into distinct work teams to reduce the possibility of your complete staff being compelled to work together.
Is paperwork being rushed in order to alleviate the financial hardship of laid-off employees?
Be aware of any financial difficulties that staff may be having and seek for ways to relieve this as best as you can. This will go a long way towards improving staff retention.
- Prepare a communication plan
You can never communicate too much during a crisis. Your communication plan should target:
- employees
- customers
- suppliers
Create a message that is clear and simple, schedule frequent updates, and maximise technology to distribute your messages. Put someone in charge of this who you can rely on. It’s a crucial position.
- Reach out to customers
Short-term adjustments in the way you run business will have a comparable influence on your cash flow. And, as you make modifications to your strategy, you must take the time to understand the financial implications of those changes and create a cash flow projection that incorporates those changes.
Ensure that orders are still on schedule.
The first step is to get in touch with your consumers. Call your key clients and ensure that current and planned orders are still on course if you are still in business.
You may not need to renegotiate payment conditions, but you may need to postpone manufacturing or modify payback terms, which may delay cash intake. Make every effort to comprehend how these changes will affect the timing and value of payment deadlines.
Offer extra services.
Finally, when you reach out to your clients, be brave and ask them if they need anything else—it’s possible that another provider may have let them down, and you might be able to fill the void. Consider this an opportunity to look into alternative choices that might generate more revenue.
- Reach out to suppliers
Supply chains are restricted, and if your supplier is located in another location or relies on imports, you risk failing your consumer. Contact them and confirm that supplies will be delivered on schedule.
Call suppliers to see if previous purchase requests will be fulfilled on schedule. Supplier delays might hinder your operations. It’s important to be aware of this early on so you can manage your clients’ expectations and revise your cash flow plan. If suppliers are late, your cash outflows may be reduced. Alternatively, if everything is going well, your cash outflows may grow.
- Prepare for the recovery
There is a light at the end of the tunnel. Here we have overlaid business activity against active COVID-19 cases. You will see that once the cases have peaked, we will recover. At recovery you will need to stay ahead of the game:
- firm up orders
- purchase materials
- recall employees
- receive new shipments
- operationalize
Plan for your cash flow during the recovery period as well. When things start to pick up, you’ll have to spend money to make money. It would be a pity to ride the downturn and then lack the means to bring your firm back up to speed.
All of your strategies should contain at least a four-week recuperation time. This recovery will be automatically incorporated into your working capital calculations when you roll your cash flow forwards each week. You will have cash for operations after orders have returned to your business.
For more information visit: https://www.business.govt.nz/covid-19/operating-at-alert-levels/