It is a special time for international companies hence, business leaders, such as yourself, need to keep stakeholders informed of how the firm is doing.
Stakeholders can obtain annual statements, but they are more difficult to generate as a result of the COVID-19 pandemic. Timeliness is a crucial consideration, too. There is some data that you should disclose to shareholders. You should work with a trusted advisor to help:
1. Assess the situation
Conduct a review to determine your financial situation.
Cash balance forecasts that take into account various situations on how long it takes your company to return to normal, whether there will be a loan arrangement or other short-term infringements that need to be resolved immediately, and to tackle the new realities of your company.
There are also various financial metrics that will display the safety and profitability of the company. Liquidity ratios test how your company can satisfy its short-term debt commitments and productivity ratios test your company' power to create revenue. Utilising this data would help you step in the right direction, give preference to expenditure and make the required business decisions for your firm.
Are your development plans still viable, too? Are your vendors and consumers still in business? The customer base and the manufacturer base can be different the post COVID-19 era.
2. Disseminate your cash and liquidity position
Stakeholders would naturally be worried about the cash and liquidity of the firm.
Try working with them on improvements to lending arrangements, access to credit lines and other means of financial assistance, such as revised deals with manufacturers, corporate guarantees and policy aid schemes.
3. Adjust costs and expenses
Which is the cost-management plan for the recession and subsequent economic recovery?
Consider tax deferrals, capital deferrals, versatility relevant to contract deferrals, or analysis of leases to see if all the office space you rent is still needed.
You will also look at opportunities for debt consolidation and long-term funding instead of short-term borrowing. Billing consumers even quicker, maintaining long-term expansion plans, selling inventory, earning tax subsidies, and rising overheads will all improve the profitability.
4. Pivot the business
Being agile and adapting to a changing market or economic climate will give you a strategic edge.
Now is the time to develop infrastructure, make major changes and redesign your business model to conform to the current trend. The stakeholders will want to see formulated plans for the following:
- Supplementing the employees with improvements in the physical world as well as profitability and mental wellbeing support.
- Changes to your business plan, if appropriate. For example, will transitioning to online purchases be a long-term transition for most retailers? If not, what's the plan to step back? Are there any overarching improvements expected for the post-COVID-19 world?
5. Think ahead
When the economy continues to grow and re-open, business will continue to rebound.
You would also want to perform anorganisational risk reduction review to help you prepare for any potential incidents that might impact your company and establish a response plan.
It could also be a way to grow the market and investigate future investment opportunities. In fact, it's a perfect time to review the operations of the enterprise (such as IT or procedures and controls) and take the opportunity to make improvements that will help the business in the long term.
How Can BDO Help?
It is absolutely necessary to keep your stakeholders up to date on your financial position and all is under control. A variety of businesses have been briefed by our team of experts on how to deliver the knowledge that their clients require.
Get in touch to learn more about how BDO can help support your company: