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As crises and pandemics occur, appropriate preparedness and a proactive response can help your business navigate challenging times.

The recent outbreak of novel coronavirus (COVID-19) has introduced new challenges to the business environment which call for a measured, practical and informed approach from leaders.

The subjects below will further help you understand your business’ exposure to disruption caused by COVID-19, and could help you position your business to be more resilient.

Actions for organisations

Business resilience

Businesspeople looking at computer screens

Building business resilience

We know some organisations are trying to operate with pandemic response arrangements that are too general for the specific impacts of COVID-19. To ensure your business can continue with minimal disruption to operations, you should consider identifying critical business processes and key relationships such as staff and third party suppliers that may be affected.

Some of the issues you may be currently facing could include:

  • no documented plan and/or updated procedures to respond effectively 
  • pandemic planning that is out of date and not appropriate or is too generic for COVID-19 response
  • roles and responsibilities that exist for crisis management, but aren’t tailored for a pandemic response.

Preparing your business to respond to the current challenges can feel remote and overwhelming. To assist you further, KPMG has developed ‘Managing Critical Moments’, a resource toolkit to support your organisation’s response to crises.

Small to medium enterprise

Two business people looking over manufacturing plant

Strengthening resilience over the short-to-medium term

The impact that the novel coronavirus (COVID-19) is having on small to medium, private and family businesses is different to large organisations. Many small, medium and family businesses are still recovering from the impact of drought, fire and floods, whilst now trying to prepare themselves for a sudden fall in demand for products or services, labour shortages and supply disruptions.

Many family and private businesses will be utilising outsourced functions such as compliance, risk, finance, technology and supply chain management, to meet cost and service pressures and strengthen their business resilience over the short-to-medium term future. 

Explore our practical advice aimed at helping emerging, private and mid-market businesses facing COVID-19 difficulties.

Read the ATO announcement: ATO releases ‘one stop shop’ for essential tax and super info on COVID-19 stimulus measures

For regular updates on matters affecting small and medium enterprises: Register here >

Supply chain

Container ship and truck on the wharf

Supply chain disruptions

If your businesses has an extensive presence in, or direct ties to, affected areas you should assess your organisations exposure so your business can appropriately support key stakeholders, employees and customers.

It is also important to understand how the effects of COVID-19 may affect your supply chain , and position it to be resilient for future challenges.

Key areas in managing the uncertainty while meeting cost and service pressures include end-to-end supplier lifecycle management, cognitive decision centres and, agile and adaptive value chains.

As essential services, transport and logistics operators must keep delivering food and products throughout the COVID-19 pandemic, however it won’t be business as usual. Explore the actions supply chain leaders should consider.

Read our key insights on the implications of the coronavirus pandemic on the food and agribusiness sector and key considerations for businesses during this time.

Stakeholder engagement

Communications and stakeholder enagement

Communication plans and stakeholder engagement

Communications during a crisis must be timely and efficient. Messages to key stakeholders should convey ability, humanity and integrity to ensure confidence and understanding regarding the organisations' actions and responses.

A crisis management plan needs to be supported by a clear and comprehensive communications plan and a core element of these plans is that both the communications and the strategy are presented from a people-first and empathetic perspective.

Proactively keeping stakeholders engaged and aware of a changing situation will assist an organisation to effectively navigate new and developing challenges.

Financial reporting

Businesswoman looking at financial reports on a digital tablet

Medium-to-long term financial impacts

As the potential impacts of COVID-19 continue to evolve various accounting estimates, which depend on future forecasts, could be impacted. Examples on specific areas that may be impacted include; carrying value of goodwill, onerous contract provisions, net realisable value of inventory, deferred tax assets, cash flow hedge accounting and the measurement of expected credit losses.

If your business is impacted we encourage you to monitor the situation and maintain close communications with key stakeholders. Changes in circumstances may require additional or enhanced disclosures in financial reports.

Liquidity assessments

Low angle view of an office building

Liquidity assessments and crisis management

As the COVID-19 situation develops businesses are beginning to anticipate the potential for impacts on revenues, funding and liquidity. Many businesses already have crisis scenarios and plans in place and for those that do not, thinking is now underway.

We are seeing a number of businesses modelling scenarios and their potential impacts on cash flow and short term liquidity as well as preparing options and contingency plans against these various scenarios.

Common approaches include thinking through the impacts of certain products or markets experiencing disruption and the flow-on effects of this to short term business performance and also to the potential longer term impacts.

Many organisations are actively considering how these scenarios will flow on to projections, budgets and financial information prepared for their various stakeholders. We are seeing a number of organisations begin to think through their communications plans across these stakeholder groups, particularly lenders.

With all this in mind, what are the liquidity and funding factors that need to be considered in a time of uncertainty? Adjacent to this the overriding priority for most boards right now is hanging in there. But focusing on today at the expense of tomorrow is a bad approach to long-term survival. 

Read our analysis and insights in the following COVID-19 articles:

Safe harbour

Safe Harbour is specifically designed to preserve good businesses and to protect them through difficult times. To assist you further and outline how Safe Harbour can be implemented, KPMG has developed a guide to Safe Harbour – protecting business through the COVID-19 crisis.

Legal implications

KPMG Law

Employment

The rapid spread of COVID-19 has led to a number of questions about how you as an employer should respond to and manage the associated issues for your employees. It is important for you to be aware of your legal obligations when developing a strategy to protect the health of workers and the stability of your business and operations.

Managing employees during a shutdown of non-essential services
An informative guide on the regulation, considerations and options for employers.

Contractual

Your business might be finding it difficult to fulfil contractual obligations despite your best intentions. Common contractual issues businesses can face in challenging times are; approving and signing contracts, complying with contractual time limits, suspending or terminating contracts and dealing with potential breaches of contracts.

Understanding your contracts is key and our technology solutions can provide you with that visibility.

Workforce productivity

Working at home

Managing workforce productivity

As coronavirus continues to spread, organisations are responding by implementing, where is possible, work-from-home arrangements to safeguard the health and safety of their employees. Many businesses will also need to help their staff and teams maintain productivity while ensuring remote work remains an effective way of ‘doing business’.

Some tips for working in a virtual team are:

  • Check in with your team each morning to discuss planned tasks for the day.
  • If your organisation has a cloud system, use this so that it is easier for the team to work on the same deliverable at the same time. If not, schedule regular check-ins throughout the day. 
  • Communicate the hours you intend to work and when you intend to take breaks. 
  • Be available on your internal messenger system. 
  • Set up Project Management software to monitor tasks and project progress.


Access our toolkit for leaders to help navigate people and productivity challenges inherent in this time of great disruption. 

KPMG Webinar: Leading for Performance in Disruption

How can we lead to sustain the performance of our people, manage their wellbeing and maintain their productivity in a virtual world?

Join us for a webinar with KPMG Partners Dr Jane Gunn and Kathy Hilyard who will share some strategies to sustain performance and productivity.

Thursday 2 April 2020
2:00PM (AEDT)

Register / Join Webinar >

Workforce mobility

Passengers in an airport

Migration and workforce considerations

COVID-19 has impacted global travel patterns as government enforced restrictions on travel and transit through countries and regions have been actioned. Consequently, visa holders wanting to enter Australia may have to reconsider their journey and the timing of their entry.

Australian employers of visa holders who wish to enter Australia may consider delaying a start work date or review options for working offshore. Where a visa holder is working for an extended period in or outside Australia, there are personal and corporate tax implications to be consider.

Making the safety of your people is a priority. Once that is secured, from an employee mobility perspective, thoughts need to turn to managing costs to protect the business.

Part of this will involve planning for, and addressing the implications for the business and the individuals impacted across:

  • personal tax, and employer reporting and withholding obligations
  • corporate tax
  • employment law.

Read our Migration Newsflash for an update on travel restrictions.

Also refer to our Global Mobility Alerts.

Cyber security

Hands on a laptop with black background

Cyber safety during crisis

With the increasing use of remote technology and employees working from home, it is important cyber security is included in your contingency planning. Since the worldwide outbreak of Coronavirus, there has been an increase in malware using COVID-19 as the bait. Cyber criminals may take advantage of global uncertainty and disruption with additional phishing, online scams and malware installed via COVID-19 heat maps and social media campaigns.

Immediate steps we recommend to take are:

  • Provide reputable sources via intranet or internet (e.g. DHHS in local state, Federal government sites).
  • Avoid clicking on information propagated via social media.
  • Avoid clicking on emails and attachments from unknown sources.
  • Do not forward emails from external or non-reputable sources.

Read KPMG's guidelines for CIOs and CISOs to help organisations to function as pandemic containment measures are implemented – COVID-19: What the CIO and CISO can do to help

We have also published guidelines to address the changing cyber threat from COVID-19 themed phishing and fake websites.

Funding solutions

Seedling growing out of a jar of coins

Understanding alternative funding options

Cash flow profiles, earnings profiles, balance sheets or credit profiles are likely to be impacted by the effects of COVID-19.

Current funders may be expressing concern about providing additional liquidity, resisting to renew commitments or seeking to re-negotiate key terms and conditions, including pricing. Understanding the alternative funding options that are available during times of volatility and how to access these are a prudent part of capital management.

KPMG Australia has developed an extensive proprietary data base of alternative funders to assist borrowers identify funding alternatives, approaches that best meet their needs.

Read our analysis and insights in COVID-19: Debt opportunities remain for smart players.

Treasury management

Stock market graph

Managing market volatility to provide confidence in decision-making

Managing treasury and financial market risk has never been as important as it is now in times of uncertainty in relation to cash flow profiles and liquidity positions. Pro-active and sound treasury risk management over, foreign exchange, interest rate and commodity exposures is paramount to protecting cash flows, help manage liquidity positions and provide boards and executives with confidence in decision-making.

In these times, senior management should consider the following areas.

  • Managing liquidity by stabilising cash flows through Hedging FX & Commodity Price Risk
    The Australian Dollar and global commodity prices recently experienced sharp declines and continue to show high levels of volatility. Combining Earnings at Risk Modelling with a proactive hedging approach can help provide certainty in cash flows, help manage liquidity positions and provide confidence in decision-making. Importing business can achieve cost stabilisation and protect their margins while exporting business can capitalise on the upside opportunities and stabilise their revenue.
  • Managing Counterparty Credit Risk to ensure Return of Money
    In times of uncertainty the ‘Return Off Money’ is more important that the ‘Return on Money’. Companies should review their investment portfolio and evaluate their counterparty credit risk.
  • Reducing transaction costs when executing/restructuring interest rate derivatives
    Business that face the need to restructure their financing portfolio may be required to close out or restructure interest rate hedges. Having the support of financial market professionals that have access to real-time market information enables companies to act quickly and reduce transaction costs.

KPMG’s Treasury & Financial Markets team helps a broad range of organisations across Government and ASX listed companies. We manage significant volumes of derivative positions for our clients across FX, Commodity and Interest Rate Markets. Find out more about KPMG's Treasury & Financial Markets Services.

 

If you have questions about disruption within your business as a result of the coronavirus COVID-19, please contact us.