The Business Leader's COVID-19 Checklist from BKD
To say it’s been an interesting past several weeks would be an understatement. We’ve seen unprecedented changes in our day-to-day lives as we’ve adapted to a somewhat new “normal.” It’s hard to predict the overall effect of the COVID-19 pandemic as businesses begin to slowly reopen and resume operations.
Business leaders have been tasked with creating plans and playbooks to guide their companies and teams through these times of great uncertainty. We’ve included a summary of BKD's COVID-19 Response Guide below that includes a checklist of key considerations for business leaders.
1. Lead with Proactive Communication
Organizations that consistently communicate with their employees can help mitigate the pandemic’s effects on their operations. During a crisis, effective communication starts with tone at the top and a clearly defined internal communication plan with regular updates from company leadership to employees. With the stress of navigating COVID-19’s implications on your business, it can be easy to overlook the challenges your employees face.
Develop a core customer communication and credit plan to reduce collection risk. It’s critical to communicate with your important customers and to do so from the stance of a business partner and not an adversary. Proactively communicate with outside organizations such as banks, lending institutions and insurance companies to inform them of your action plan and review the terms and conditions of any agreements currently in place. Formulate a plan to protect the supply chain, and communicate this plan with critical suppliers.
2. Cash Flow Planning
As organizations and industries have faced mandated stay-at-home orders, social distancing and isolation orders, economic activity and related cash flow have likely slowed. Without positive cash flow, a business’s cash reserves can quickly deplete.
- Be proactive in communicating with your financial institution and creditors to inquire about modification agreements if needed.
- Analyze cash flows to help identify critical liquidity gaps.
- Stay informed – Cash is king, and knowledge is power. Stay on top of your accounting and numbers daily.
3. Understand Your Relief Options
Recent legislation has enhanced and created additional programs for businesses. Work with your lenders, financial professionals and attorneys to see if you qualify for the programs listed below.
Economic Injury Disaster Loan (EIDL)
The U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan Emergency Advance (EIDL) program is available to some small businesses and organizations that have been directly affected by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides several favorable changes to the EIDL program available through December 31, 2020.
CARES Act Provisions
The CARES Act (S.3548) was signed into law on March 27, 2020, by President Trump and includes significant tax, unemployment insurance and health-related provisions, as well as provisions affecting SBA loan programs available to small businesses.
Paycheck Protection Program (PPP)
The CARES Act increased the statutory 7(a) loan limit for eligible small business to $10 million through December 31, 2020. In addition, the CARES Act authorized the SBA to provide paycheck protection loans to small business owners, including sole proprietors, independent contractors and self-employed individuals. Loan recipients may be eligible for loan forgiveness on covered loans for amounts spent on qualifying expenditures during the applicant’s eight-week covered period. The CARES Act indicates canceled indebtedness or loan forgiveness won’t be subject to taxable income for federal purposes. However, currently, through a ruling by the IRS, the expenses paid with forgiven funds also are nondeductible. The CARES Act authorized $349 billion for the program, but due to popular demand, the program quickly ran out of funding. As such, on April 24, 2020, President Trump signed the Paycheck Protection Program and Health Care Enhancement Act, which allocated $310 billion in additional funding for the PPP. This program has been very fluid as additional guidance and regulations continue to get released.
4. Tax Provisions
The Families First Coronavirus Response Act and CARES Act include an overwhelming amount of guidance, and it’s important to understand the key provisions that could be most significant to taxpayers. These provisions, generally taxpayer-friendly, are designed to provide cash flow and tax relief. For a detailed flowchart and summary of tax relief options, including payroll tax credits and deferral options, see page 15 of BKD's COVID-19 Response Guide.
5. Cybersecurity Considerations
Activity from cybercriminals remains a threat to businesses, and now isn’t the time to let down your guard. Here are five things you should consider to help protect your business from potential vulnerabilities in your cyber defense:
- Beware of suspicious emails
- Verify emails
- Be aware of phone call scams
- Adjust your social media privacy settings
- Stay in contact with those you know
6. Remote Work Best Practices
Many businesses have transitioned their organizations, departments and teams to a remote work environment. This transformation likely occurred in just a matter of days when governmental authorities released proclamations to limit activity and increase social distancing to help curb the pandemic. Will remote work become the new normal? Below are some key considerations that may be helpful when updating your continuity plan.
Remote Access + Capacity
How will you allow your employees to access data? A virtual private network is likely the preferred method to deploy security and will need to be tested periodically to identify bottlenecks and limitations.
A usage policy should be reviewed and approved by management to help ensure company needs are being met, proper security procedures are being followed and business and customer information is being safeguarded.
The confidentiality of client or company information should carefully be considered when working remotely. Employees working remotely should determine who has access to their workspace and establish ways to protect sensitive information.
Due to current health recommendations, it’s probably best to avoid working in public remote workspaces during this time. However, ensuring employees have access to the proper equipment and technology, i.e., portable travel monitors, internet connectivity, secure mobile Wi-Fi hotspots, etc., for their “home office” is critical for the success of working remotely.
Identify who’s deemed essential in allowing and supporting the organization to work remotely and what’s required of those individuals.
This article is for general information purposes only and is not to be considered as legal advice. This information was written by qualified, experienced BKD professionals, but applying this information to your particular situation requires careful consideration of your specific facts and circumstances. Consult your BKD advisor or legal counsel before acting on any matter covered in this update.
Article reprinted with permission from BKD CPAs & Advisors, bkd.com. All rights reserved.
You can count on The Partnership to continue to share accurate and fact-based updates as well. See more on COVID-19 here.