Five ways to protect your SME from the impact of coronavirus
There is a growing expectation that the coronavirus (COVID-19) will spread throughout the business community. Thankfully, the chances are that even if employees do contract the virus, they are likely to only have mild flu-like symptoms, will recover quickly and be okay unless they are elderly or unwell.
However, it is the negative economic impact from the coronavirus outbreak caused by disruption to the international supply chain and individual, company and government actions to protect against infection that could be the biggest killer in the business community. There is also a reasonable chance it could force the Australian economy into a recession.
Of course, the extent of any impact will depend upon the industry businesses operate in and their relative exposure and sensitivity to knock-on economic impacts.
Just as SMEs should have plans to safeguard the health of their employees, it is critical they also have plans in place to protect their businesses from coronavirus-induced supply and demand shocks.
So, what can you do, as an SME operator, to protect your business from the worst impacts of COVID-19?
Protect your employees
Make the most of readily available information on COVID-19 to keep your staff informed, safe and as calm as possible. NSW Health and The US Centre for Disease Control (CDC) have listed a number of steps that employers can take to protect their staff. These include sending home sick employees and discouraging them from returning to work (also those who have sick family members), emphasising ‘cough and sneeze etiquette’ and hand hygiene, conducting routine cleaning and ensure that steps are in place to minimise the risk level for employees who need to travel.
Ensure ‘working from home’ infrastructure is in place
Encouraging employees to work from home may mean that you need to invest in additional technology. For example, some employees may not have sufficient bandwidth on their home internet connection to conduct their work. It might also be necessary to set up secure wi-fi networks to secure company data while employees are working remotely.
Scrutinise your supply chain
Where do your supplies actually come from? If they are sourced from a coronavirus-affected area, it might be necessary to line up an alternative supplier should your current supplier be forced to temporarily halt production.
Can critical parts of the supply chain be rationed? And for how long? Remember, that when supplies come back online there are likely to be abnormal spikes in demand as a result of hoarding.
Much can be learnt from experiences such as this, which lead to better management of the supply chain in the event of another crisis, such as a further virus outbreak.
Make the most of recently announced government support
The Australian Government recently announced a $17.6 billion fiscal support package to try and guard against the more severe economic impacts of the coronavirus.
This package included increasing the instant asset write-off threshold for business to $150,000 and making it available to larger companies, as well as a 15-month investment incentive which will allow businesses to deduct 50 percent of the cost of an eligible asset on installation.
The government has also promised an initiative to boost cash flow to businesses that it says will provide up to $25,000 back to SMEs, with a minimum payment of $2,000 for eligible companies.
Consider alternative forms of finance
The pool of working capital is the most important asset that your business has. It’s a good idea to have a strategy for accessing additional capital if you need it, such as a line of credit, especially as there is a chance the economy could move into a recession. Alternative sources of credit such as invoice finance can take the pressure off when cashflow is tight, and help cover regular expenses such as wages, utilities bills and tax obligations. Invoice finance is specifically designed to turn your unpaid invoices into cash to pay supplier accounts and other operating expenses.
By Greg Charlwood, Managing Director, Australian Invoice Finance
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