COVID -19 OUTBRE AK
BUSINESSES GOING FORWARD TOWARDS A NEW NORMAL The COVID-19 outbreak that started in China last year has now spread around the globe, also affecting the Dutch Caribbean islands. Although the number of infected citizens and associated deaths is still below the European and American levels, our health authorities and government officials are addressing the threat with maximum care. UPDATED AS PER MARCH 31, 2020
16 16 Temporary precautionary measures coupled with the adverse impact of the virus internationally are having a profound negative effect on our economy and local businesses, especially the ones that are directly dependent on tourism. In addition, the closure of all non-vital companies is having a severe and disrupting effect in our small, inter-connected economy. Over the next few months, our business leaders will face the challenge of keeping their companies on track, while first and foremost guaranteeing the health and safety of their workers and communities. IMMEDIATE MEASURES Top priority for the business community is to ensure sufficient liquidity and acceptable levels of working capital. The starting point should be a quick scan of businesses’ cash as well as its inventory, accounts receivable and accounts payable positions (broadly defined as working capital). After this first assessment, businesses should quantify the negative impact that the decline in sales and supply chain inefficiencies may have on their financial position by creating different scenarios with varying associated probability levels.
CURAÇAO BUSINESS | EDITION 1 | 2020
Meanwhile, business leaders may benefit from immediately reducing certain variable expenses while maximizing its account receivables collection. If needed, companies may try to negotiate their payables conditions with their suppliers, however with caution to prevent a transfer of the liquidity problem further in the supply chain which can lead to future late deliveries as well as added strain to the commercial relationship. Even after performing these steps successfully, additional funding may still be required to bring liquidity to acceptable levels. Businesses should engage with their existing financing partners and understand whether the existing financing options – overdrafts, credit lines, guarantee letters – are still available and what terms and conditions would apply to new, bigger facilities. When trying to secure financial support, it is key to put up a credible case by getting the facts right and delivering high-quality, relevant information. This will increase the chance of obtaining the required financing at better terms and conditions. The same applies for the local governments support measures that are currently being announced and which details will follow shortly.
RETURNING TO WORK While there is still no expected date for resumption of normal operations, the business community should urgently start to imagine and plan for what could be referred to as “new normal” times. When resuming operations, businesses should try to grasp the new industry dynamics and evaluate whether their strategic plans and operations are still valid. Companies may consider alternative revenue streams and different ways of doing business. They will also have the opportunity to revisit their variable cost structure and change their investment plans to reflect new strategic objectives and available funds. On a more operational level, the supply chains will most likely need to be optimized by focusing on a more efficient planning of the workforce and by using an agile production scheduling. Unnecessary production processes should be eliminated or re-processed to fit the specific demand of the – new – business. This includes alternative inbound and outbound logistics channels, the latter being particularly relevant for
