The Coronavirus (“COVID-19”) has quickly escalated into what is known as a black swan event. The virus first revealed itself in Wuhan, China in late December 2019. As we enter April 2020, the virus has infected over 683,000 people, and more than 32,000 deaths.
The provincial and federal governments have announced several measures to help small and medium-sized enterprises, however, the quintessential question is how long will it last?
One thing is for certain the impact on businesses will only worsen as the virus continues to spread – so we are recommending that our clients prepare for the worst-case scenario.
Provincial governments are determining their own lists of industries that they deem to be essential services. If your business is a non-essential service, you may be required to temporarily shut down, with potential fines for non-compliance.
For more details, please visit the official provincial or territorial websites below:
Do you have customers that typically delay payment for the goods or services you deliver? Is there a supply restriction for one of your key vendors?
A major consideration is to determine whether your key customers or suppliers remain reliable. Without available products or services, your business may have difficulty operating in the near future. Being situationally aware of your suppliers’ status will help you better-plan your near-term outlook.
The recent turmoil has put tremendous pressure on banks and other financial institutions. Do not assume that your existing financing options are still available. How much will you need? How long will you need it for?
Actively engage with your lenders now so that there are no surprises should you require financial assistance in the future. It’s important to maintain an open line of communication with your account manager or branch contact. They will help you navigate any hurdles regarding prospective financing.
In periods of economic turmoil – focus on cash flows is paramount.
Remember the first point about cash flows? While this may offer temporary relief, these payments cannot be deferred indefinitely, and you can only rob Peter to pay Paul for so long. Consider how you will be able to pay these deferrals in the future.
Your insurance plan may entitle you to business interruption insurance payments. This is typically an add-on policy in the event of your business temporarily needing to shut down. There are 3 types of policies:
Speak to your insurance provider to review your potential entitlements.
Much like determining critical processes, you need to understand the minimum level of personnel required to support your operations.
Developing a summary of all your staff, their job functions and roles could be helpful. Consider training employees to ‘wear multiple hats’, so that they can step in if there is an unexpected employee absence.
For many businesses, the COVID-19 pandemic may be the first time they’ve had to consider allowing employees to work from home. Depending on your industry, some or all of your employees may be able to work remotely, but there are key considerations to ensure productivity:
COVID-19 is a highly dynamic situation. As it worsens, governments will be under increasing pressure to combat the economic impact through more aggressive economic response plans to benefit small and mid-sized businesses.
Make yourself aware of all options available to both businesses and individuals. If you are not comfortable with wading through the fine print – now is the time to pick up the phone and have a call with your trusted advisors.
We understand that it is a difficult time – we’re here to help. If you need guidance and you cannot afford it, KPCPA is offering free or fee-deferred assistance for eligible business owners.