COVID-19 Battle Plan
26 March 2020
The Prime Minister and the Premier of New South Wales have just announced tough new measures and restrictions on interpersonal dealings, with a view to containing the transmission of COVID-19. With a partial lockdown imminent for many across the state and the country, and the possibility of a full lockdown on the horizon, it is SMEs and sole traders who will feel the most pressure from the constantly changing landscape.
While the government tries to act and react to the effects of these new measures, companies and individuals can take some of their own measures to try and minimise the worst consequences of this difficult period.
As the situation escalates rapidly, we recommend everyone in business takes the following steps.
Check your contracts; all of them: your suppliers’ contracts, and your own contracts with your customers or clients. Check force majeure clauses and insurance provisions.
Check if your suppliers or customers have issued you with COVID-19 protocol that they are observing or implementing and understand how that impacts on your day to day operations.
Understand your obligations to each of your key stakeholders, whether they sit in your office, or deliver your stationery.
Check your employment contracts with respect to leave and working from home arrangements to see what you need to do to brace for the worst financial impact that might occur.
Once you have checked, and you understand, your position (seek assistance if you remain unsure about any of these things), it is advisable to make a plan and start implementing it as soon as possible. While there are many variables and uncertainties about what is ahead, a rough plan that encompasses best and worst-case scenarios is best.
Evidence suggests that disruption may last for the next three months – at least. Therefore, the plans should include weekly cash flow forecasts for at least a 12-week period, taking into account when big commitments such as rent, tax and wages are due.
Think about your own protocol for dealing with a full lockdown, whether you and your staff can work from home. Develop, as clearly as possible, a formal plan for how to handle work arrangements, responding to clients and delivery of your services.
You may want to consider whether you will need to liquidate any assets, and the prospects of doing so, during the period. Your financial advisers are undoubtedly ready and willing to help with this process and can work in tandem with your lawyers in understanding whether commitments can be deferred or renegotiated.
Talk to your staff about what you’re facing, and how you would like to deal with it. Be open what measures you’re considering to tackle the difficult times ahead and seek input on how your employees can assist you so that the business, and the jobs, survive. Make sure your staff understand their rights and obligations as employees. Talk to an employment lawyer if you are unsure in this regard.
Talk to your customers/clients about what is going on in your workplace in the circumstances. Issue COVID-19 protocol created during your planning phase above. Reassure them you are implementing ways to continue providing services and are prepared for difficult times. Where applicable and possible, seek advanced payments or deposits for postponed services or deliveries.
Talk to creditors or suppliers about flexible payment arrangements or renegotiated credit terms if your planning (above) suggests you are otherwise facing financial catastrophe. Almost all businesses are feeling the pinch during this time, so communication on your anticipated ability to satisfy your financial obligations is key to ensuring continued operation.
Talk to your finance providers. Some of the major banks have offered mortgage holidays or deferred loan payment arrangements to help get through these difficult times.
Talk to the ATO about the tailored solutions it is offering, including temporary reduction of payments or deferrals or withholding enforcement actions (including director penalty notices).
Talk to your accountants and your lawyers – get advice from your trusted advisers about understanding and renegotiating your contract terms, resolving disputes caused by the current circumstances, or taking advantage of the financial or logistical support offered by State and Federal Governments.
Our dispute resolution, employment, commercial and insolvency experts are ready to assist you through these difficult times.
For further information, please contact:
|Julien Castaldi| Director
|Seamus Burke| Director
|Andrew Knight| Director
|Nell McGill| Senior Lawyer
Ph: 02 4040 1000 | Address: Level 2, 77 Hunter Street, Newcastle NSW 2300
This document contains information only and should not be relied upon by anyone as constituting legal or medical advice.