COVID-19 Business Plan

06 April 2020

We understand that a single set of procedures or responses might not fit all organisations or each individual situation. The BDO Corporate Finance team are available to work with companies to create a business plan, in order to  facilitate the development of an individualised response.

As it is still uncertain how long this outbreak may last, we recommend that businesses carry out a thorough assessment of the risks and potential impact of COVID-19 on their operations, and implement swift responses to limit business disruption.

Given the impact of COVID-19 on New Zealand businesses, BDO has developed a risk assessment framework in order to aid key stakeholders in their decision making around profitability, cash flow and sustainability in these uncertain times. While the situation is still  evolving, now is the time to assess the immediate risks to your business, with preparation and planning potentially forming the difference  between success and failure. 


Our COVID-19 Business Risk Assessment includes the following at a high level:

  • Consideration of the sustainability of operations in the face of COVID-19 and beyond. 
  • Forecasting and modelling assistance, including modelling downside risk scenarios, and assistance with bank funding requests.
  • Balance sheet assessment, including working capital requirements, cash conversion, fixed assets, debt and equity.
  • Assistance with the preparation of a short-term cash flow forecast to assist with cash stress testing, cash burn, and where changes or assistance may be required.
  • Review of the current strategies in place and the ability of the business to adapt.
  • Consideration of the business’s governance, shareholder alignment and capability.
  • Overview of other potential levers available to support the business.




The BDO Corporate Finance team have prepared a risk assessment framework which focusses on particular areas of concern, in order to facilitate the development of an individualised response.

Review of the Business

  • High level review of the business’s operations and industry.

Sustainability of Operations and Impact of COVID-19

  • Does a profitable and sustainable business exist, with a viable long term solution?
  • Sources of revenue and the likely impact to turnover in the short-medium term. If revenue is expected to decline by more than 30% on prior year, consideration of Government support options.   
  • Fixed versus variable expenses and the likely impact of reduced turnover. Consideration of which costs can be flexed or deferred more or less easily in response to reduced activity.    
  • Known difficulties faced by, and stability of, key customers and suppliers.
  • Access to materials and other potential issues that may arise within the supply chain. 
  • Ability of the business to adapt.

Short-Term Cash Flow

  • High level review of the business’s current short-term cash flow forecasts (if applicable), and the resulting cash requirements.
  • Assistance with the preparation of a short-term cash flow forecast, covering an initial 13 week (3 month) period.

Balance Sheet

  • Overview of the current balance sheet position and key ratios, including solvency, current level of funding, availability of additional funding, banking covenants, and the level of Fixed Assets, Bank Debt, Third Party Debt and Shareholders’ Equity.
  • Debtors -Consideration of overdue amounts and payment arrangements in place. 
  • Creditors –Review of amounts due to suppliers and statutory authorities. Consideration of overdue amounts and payment arrangements in place. Assessment of potential contingent liabilities.
  • Net Working Capital and cash conversion cycle –Consideration of evolving net working capital requirements due to affected customers, suppliers and supply chains, including consideration for a moving cash conversion cycle.

Strategy Assessment

  • Is there currently a strategy in place?
  • Consideration of the shareholders alignment with the business’s current and proposed strategy, along with their willingness to support the implementation of any recommended outcomes.

Options for Discussion

  • Consideration of whether other levers may be available to the business, such as government assistance, IRD arrangements, shareholders capacity to introduce additional capital, bank relief, compromises with creditors, and the ability to cut costs.

Overall Assessment

  • High level assessment of the overall business viability, taking into account each of the assessed risks and available options.




Over recent weeks, the unprecedented global COVID-19 crisis has directly and materially impacted economic activity in New Zealand. This has caused many otherwise healthy businesses to experience  material reductions to revenue while overhead expenses have remained fixed. The result has been a cash flow crisis, and even potential solvency concerns, for many New Zealand businesses. Even if  your business is not yet in this situation, an immediate and robust COVID-19 business plan is necessary to give you the best chance to ride out the crisis and ensure long-term viability. 

We recommend clients follow the outlined steps below to best prepare and manage their way through this business crisis.

Step 1 – Build your ‘new world’ cash flow forecast 

The world and business environment have changed quickly. It’s essential that boards and management have  visibility on the new reality in order to make informed decisions. To do so, businesses need to build a three-month weekly cash flow forecast that takes into account their ‘new world’. Once the next three months is understood, the forecast should then be extended a further nine months (monthly).

While building your cash flow forecast, it’s important to consider the impact of disrupted revenue streams  while retaining committed expenses as they currently stand. This will identify if cash flow is still positive given current conditions. If not, businesses need to understand their cash burn and what the timeframe is before existing reserves are exhausted (follow steps 2 to 7 to assist with this process). 

Step 2 – If you have a cash deficiency now or coming up –identify measures to reduce costs

Identify discretionary or non-business critical expenditure that can be eliminated immediately. Next, consider overhead costs that through negotiation can be deferred, adjusted or removed (e.g. rent, equipment leases, employee costs). Lastly, identify capital outflows that can be deferred or adjusted, including dividends, bank loan repayments or capital expenditure.

Step 3 – Engage with key stakeholders regarding potential standstill arrangements 

This step will be critical to business success. Businesses need to engage with key creditors such as landlords, lessors, IRD and suppliers, to explain their situation and attempt to negotiate standstill arrangements where possible. An independent report from your accountant or financial adviser on your financial position can assist with these negotiations. 

Step 4 – Conduct due diligence on other capital sources available 

Consider collateral and equity available to support finance. As part of this step, engage with existing financiers to:

  • Bring them into the fold –they can be one of your biggest allies in these situations
  • Identify additional facility headroom –consider drawing down cash and stockpiling on your balance sheet
  • Identify new facilities available from your existing financiers

It’s also important to consider new financiers or products that may assist to bring forward cash receipts (e.g. asset-backed loans, debtor finance facilities or working capital loans as part of the government stimulus package). Equity sources should also be considered here. Questions to consider include:

  • Do existing shareholders have the capacity to contribute? 
  • Are there logical buyers of your equity you can approach? 
  • Do you have non-core assets that can be realised in a short time to generate cash?

Step 5 – Consider government support available

Identify the measures in the government’s stimulus packages and government support programs that are applicable to you. Determine how these support programs affect your cash flow and apply where relevant.

Step 6 –Develop a 90-day COVID-19 business plan to maintain solvency

Use the knowledge gained through steps 2 to 5 to develop a 90-day COVID-19 business plan. The plan should  include action items with respect to:

  • Implementing the cash flow measures as identified above (i.e. apply to the financier for funds and negotiate with creditors for standstills)
  • Engaging with key stakeholders such as employees, financiers, landlords, customers, suppliers and remaining creditors to ensure they understand your position and what you need from them to continue business.

Step 7 – Update your cash flow forecast for outcomes of steps 2 to 6

Re-evaluate your cash flow forecast to align with your 90-day COVID-19 business plan. As outlined in step 1, set your initial forecast for a period of 90-days on a weekly basis to be sure you can remain cash flow positive. Once you are confident you can manage through the next 90-days, extend your forecast for a further nine-month period. Remember to take into account any timeframes of standstills agreed to determine when you will exhaust cash reserves.

Step 8 – Implement the plan and monitor regularly

Now that you have developed your COVID-19 business plan and cash flow forecast, start engaging with relevant stakeholders to put the plan into action. Monitor progress regularly and keep updating your cash flow forecast (we recommend weekly to begin with) to monitor the strength of your cash reserves




New Zealand Directors, Executives, and Business Leaders should consider the following in light of the COVID-19  outbreak and the resulting impact on economic activity in New Zealand. The BDO Corporate Finance team can assist with your requirements during these unprecedented times. 

Business Risk Assessment

  • BDO has developed a risk assessment framework in order to aid key stakeholders in their decision making around profitability,cash flow and sustainability. We can assist your business in carrying out a thorough assessment of the risks and potential impactsCOVID-19 may have on your operations, enabling you to implement swift responses to limit business disruption. 

COVID-19 Business Plan

  • The New Zealand business environment has changed significantly and continues to change as this crisis unfolds, adding additional complexity and requiring consideration of novel issues in your day-to-day operations, forecasting, and general planning. As such, an updated business plan, tailored to this new environment is key to stewarding your business through these potentially turbulent times. 

Increased Reporting

Consideration should be given to an uptick in the frequency and detail of reporting with regard to both historical performance, operations and forecasting. With increased levels of uncertainty, detailed timely reporting is essential to ensure your business can react and plan fluidly in these ever-evolving circumstances.   

Benefits of Seeking Independent Expert Advice

  • Engaging with Independent advisers, be it lawyers, financial advisors, or bankers early can be a pre-emptive step in identifying and preparing for impending changes and challenges, and formulating an informed response and action plan. 

Act Now

  • Acting early is key to giving you the best chance of ensuring the long-term viability of your business. Now is the time to assess the immediate and pending risks to your business, with proactive preparation and planning potentially forming the difference between success and failure.

Directors Duties 

  • Cashflow and balance sheet solvency will be front of mind for Directors, alongside duties under the Companies Act, Health and Safety, and employment legislation. BDO can assist directors in providing independent expert advice in respect of the directors duties and obligations. 

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Information on this insight was last updated 06.04.2020