How businesses can prepare for the consequences of Coronavirus
- 9th March 2020
Coronavirus is the word on everyone’s lips at the moment, with many thinking about how they can prepare for an epidemic. For most people, this means stocking up on hand sanitiser and tissues. For business owners, there is a whole lot more to consider.
The headlines that we are continually faced with are about the rise in cases and the sad number of fatalities, but there will be other casualties too. Businesses, particularly small businesses, face dire consequences if they fail to prepare for the period of uncertainty that lies ahead.
There is no ‘one size fits all’ set of precautions which will keep your business afloat during a crisis. It will depend on your company’s sector, the state of your balance sheet, potential complications in the supply chain, and many other factors besides.
However, there is one piece of advice which is applicable to all companies: prepare now.
Remote working is something that many companies will have to consider, particularly for the accounts department. Do employees have laptops which they can take home with them, or do these need to be bought? Are there secure connections available? Does a VPN need to be created? Keeping data flowing is almost as important as keeping cash flowing.
But cashflow is the single greatest concern for accounts departments and companies as a whole. There will be no way around this for some companies, so thorough contingency planning is the best solution. Consider what the biggest risks are and what happens if cashflow slows down but the demand for payments continues?
Make sure you have a detailed understanding of your cashflow and think about where money could be saved. If there is any capital expenditure which can be deferred, do so immediately. As for other discretionary expenditures, do you really need to be paying for advertising and hospitality at this time?
Think about other ways in which you could manage your balance sheet as well. Perhaps now would be a good time to take a loan holiday, or to defer payments on leases. Approach landlords to discuss the possibility of deferred payment arrangements.
Even if you are not ready to take action on these things yet, you can start by making the right calls and preparing the paperwork for these deferments. Do it now to avoid stress later. And include HMRC in the conversation - of all the organisations, they are most likely to be understanding of a deferred payment arrangement.
Anticipation is essential to good management, and it may well be the greatest asset a business has in the battle against Coronavirus. Take action now, so that your business and your employees can keep the cash flowing until the crisis is over.
This guidance was based on Richard Murphy’s article for AccountingWEB
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.