Article:

Preparing your business coming out of Alert Level 4

20 April 2020

As anyone reading this will be acutely aware, the COVID-19 pandemic will in all likelihood change the way you do business for a long time to come.

It is imperative to understand where your business is at now, the key risks it faces and its readiness for commencing trading as we come out of Alert Level 4.

At BDO we have developed a suite of business diagnostic tools that are available to assist your business get through the challenges that COVID-19 brings. Our tools cover off following key areas:

Short-term cashflow assessment including tax options
Sustainability of operations
Impact of Covid-19 including the health and wellbeing of key stakeholders
Shareholder alignment/capability
Stakeholder support (Banks, Shareholders)
Strategy and governance decision making
Debtors
Creditors
Balance Sheet strength
Options available to diversify

You may be eligible for Government support through the Regional Business Partner Program

Short-term action plan

Once we have worked with you to complete our initial analysis, a short-term action plan will be devised covering the key areas for your business to address (see below). The potential output of the above would be a succinct, “fit-for-purpose” plan that prioritises the what, who and when for your organisation and can be used as a roadmap for the upcoming months. It can also be used as a key discussion document for sharing with your business’ stakeholders.

For optimum results, the short-term action plan should also be supported by an integrated cashflow forecast that clearly shows anticipated trading and cashflow requirements.

The following areas would be assessed as relevant to your specific business situation:

What can I be doing now to prepare?
Determine short term strategy
- Complete risk assessment and environmental scan including opportunities and threats
- Operational – Supply chain continuity, logistics
- Customers and sales
- HR, Employment issues and structure of the business – best way to mobilise the workforce etc
- Health, safety and welfare
- Ensure your organisation understands the implications of social distancing and other Government directives when moving from Level 4
- Consider the mental wellbeing of your people. Free resources such as the Mentamia and Melon apps are available to assist
- Finance and funding
  - Overall solvency
  - Working capital needs
  - Funding required from banks
  - Subsidies, grants or funding available
  - Information required to get funding (cashflows, plans etc)
- Legal issues to consider
- Reporting and communications required, i.e. how to track performance by using up to date info and reporting on key KPIs
Other factors to consider:
- Governance/Risk Management/Directors responsibilities
- Companies Act and the new insolvency relief rules
- Industry specific issues
- Tax relief available – including the new tax loss add-back
- When the alert levels are downgraded how will it affect my business? Including a plan in case we go back to Alert Level 4 or there is restricted activity in your geographic area or industry
- Wealth protection considerations