This is a Thought Leadership article by PrimeGlobal member firm Joanknecht which discusses the steps to take to be ready for recovery in a post-COVID world.
If you would like to access similar articles about COVID recovery, you can read more in our dedicated COVID Recovery Center HERE>
The coronavirus crisis might not be over yet, but some organisations are already starting to feel the ‘pain’ of the upcoming economic recovery. These include early-cycle companies in the electronics and car sectors. Companies in these sectors are already running into difficulties with their preparations for an improvement in demand. The lesson to be learned here: scale up on time or miss out on post-coronavirus opportunities.
At the start of the coronavirus crisis, many companies responded by reducing their costs. No surprise there. They chose to cut back on material and staff costs in particular, a move that met with the approval of shareholders and banks. Their support was important, as companies will find it impossible to stay afloat in difficult times without it. The same applies for creditors: a company will only be able to continue to supply customers and obtain prefinance if creditors have confidence in its crisis plans and perspective.
During the coronavirus crisis, survival was – and still is – the main priority. However, the time has now come to shift attention to the future, to a time when the coronavirus pandemic is over. When government support measures are withdrawn, companies will need to ensure that they have new financing in place. With this in mind, a crisis plan should always be followed up with a recovery plan. As the economy improves, rules will very quickly start to change too. Instead of cutting back, you will need to invest in employees, working stock and marketing. This will require new working capital and proper planning. The longer the turnaround time for the provision of products or services, the more likely that investments and financing will be necessary. So, make sure that your recovery plan is in place on time.
As a company restarting after the coronavirus crisis, you will need additional financing. However, your figures for the previous year and the pre-coronavirus market conditions will not be in your favour. Hopefully, you will have kept in touch with crucial suppliers and financiers as they will be indispensable for your achievement of a good recovery plan. So, keep them in the loop! Financiers can tell you which extra information they need and how much they are willing to invest. Suppliers will keep you up-to-date on any planning or delivery bottlenecks they expect. So, make suppliers your business partners rather than just cost items.
Car makers are currently experiencing the effects that their decisions have had on suppliers. They rely heavily on microchips for the technology they build into their products, but cancelled all their orders for these products when the coronavirus crisis started. The consequence? With the economy now improving, car makers are at the back of the queue with chip producers. This proves the importance of a good recovery plan. Be sure to keep lines of communication open with the Dutch Tax and Customs Administration, banks and suppliers too. This will avoid you becoming the victim of a scarcity of your own making and missing out on major post-coronavirus opportunities as a result.
This blog was written by Georges de Méris, Forensics & Recovery partner. You can contact him by telephone on +31 (0)40 240 9476 or by e-mail on email@example.com.
Joanknecht was founded in 1948 and has been through all cycles of the economy. We uphold the highest standards in professional expertise and customer services. Our successes over the past decades prove that we must be doing something right. At first glance, our package of services seems to have much in common with many other firms. We are convinced, however, that our approach is essentially different. Our objective is to contribute to your success and our firm is equipped to do so. All our employees are dedicated, self-confident and prepared to go the extra mile. Our aim is to help our clients seize their opportunities.Learn more