By now, most of us are overwhelmed with the information coming out about COVID-19. Many people are being forced to prepare for the worst with no warning, and finding themselves scrambling last minute. Finding a way to help clients bridge the gap in planning during this pandemic is a high priority. Preparing for the worst by having a plan is essential.
For those that may not know, the NYS Shared Work Program is a hybrid option that keeps employees on reduced hours, while they maintain some of their UI benefit. You can select the weeks to use as needed and adjust to 20-60% in hour reduction. You can create “Units” of people to treat reductions separately. The federal government will be adding to this in the CARES bill. For more information, check out the following PDFs:
SBA Disaster Assistance Webinar from The Bonadio Group.
A detailed summary of the SBA Coronavirus PPP Loan can be found here.
Below are condensed and refined some steps that are recommended for immediate action:
A. Evaluate your liquidity and likely cash-out date under your best, most likely and worst-case scenarios.
B. Objective: have a minimum of 4 months of cash. 8 months is better. If you have more than 8 months, congratulations. If not, take action now.
1. Determine if your company qualifies as “essential”, based on the latest NYS mandate (see attached). Look carefully, as there are many exceptions that may qualify what you do, based on who you serve.
2. Determine how many of your customers qualify as “essential”, based on the latest NYS mandate.
3. Draw down all debt commitments. It’s like buying insurance. There’s a cost, but it’s worth it if things get worse. Ask existing and new lenders for additional funding.
4. Make a list of all vendors by $ spending amount. Call all large vendors and ask for lower prices. If appropriate, offer to sign a longer agreement in exchange for lower cash payments in 2020 and 2021.
5. Consider potential clients who are considered “essential”, based on the latest NYS mandate. Shift marketing program focus to these areas and cut other marketing $, for now. Call if you would like to discuss potential messaging for new clients.
6. Payroll costs are probably your largest cost item. If necessary, you may need to take action. Choices include:
- Hiring freeze
- Excused time off without reducing PTO time
- NYS Shared Worker Program (up to 3 days unemployment, 2 days pay)
- Consider cutting all salaries by 20%
7. Some of your customers will delay paying you; some will default. Monitor collections and charge backs several times each week to notice widening Accounts Receivable patterns. Develop a playbook for mitigation.
8. Because events are changing so quickly, consider sending a short weekly email to your employees with any updates
If you have any questions or concerns during this time, please call SkyPort IT at 585-582-1600.