So what does this mean for businesses? The spread of this pandemic and its ripple effect swept across the world so fast that it left us with little or no time to respond and adapt. For a start, businesses have to practice telecommuting and working from home. Some larger companies may have a Business Continuity Plan (BCP) which to certain extent plan for such eventualities.
But for many others they have no such BCP in place (especially true for the smaller operations). Hence many faced the challenges of not being able to respond immediately due to lack of equipment (laptops, printers, etc) and sustainable network in their homes or residence.
Most importantly the process of working from home has never been tested by the businesses and therefore causes a lot of last minute unforeseen disruption to the business. Therefore it is safe to say BCP in today’s context is no longer a luxury for bigger companies but a survival planning for all businesses.
Hope for the best, but prepare for the worst? What is the worst case scenario for businesses amid this Covid-19 pandemic? Have we seen the bottom of it and or are we still scratching the surface of the problem? Business slows down in certain hard hit sectors is one thing, lengthening payment period from the debtors is another. The increasing days taken to pay debts owed to businesses could be due to administrative delays (i.e. businesses working from home, authorised signatories not able to sign cheques, so on and so forth) or in more serious situation this could be triggered by financial difficulties experienced by the debtors.
It is imperative for businesses to keep close and regular contacts with the debtors to check for payment status and monitor their business conditions. Companies that engage Factoring Facility or Receivables Services typically outsource their collection and ledger administration to the Factoring Companies while continue to draw cash from their unpaid receivables to fund their salaries and overheads.
Finally, we have to embrace the notion that change is the only constant. What is workable and acceptable in the past may not hold true anymore. Health experts are of the view that this pandemic will not go away quickly. Governments around the world are not taking excessive risks in reopening the economy. Social distancing may be here to stay. Certain business process or business sectors may even disappear indefinitely. Working from home for many businesses and digital business dealings could be the long term solutions. Are we prepared for this new norm?